Preamble

The House—after the Adjournment on 2nd April, 1953, for the Easter Recess—met at Half-past Two o'Clock.

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

CITY OF LONDON (CENTRAL CRIMINAL COURT) BILL [Lords]

Read the Third time, and passed, without Amendment.

BROMLEY CORPORATION BILL [Lords]

To be read a Second time Tomorrow.

NEWBURY CORPORATION BILL [Lords] (by Order)

Read a Second time, and committed.

RUNCORN-WIDNES BRIDGE BILL [Lords] (by Order)

Second Reading deferred till Tomorrow.

FINANCIAL STATEMENT (BLUE PAPER)

Sir H. Williams: Before Prayers the customary blue financial paper was not available in the Vote Office. I wonder, Mr. Speaker, if notice could be taken of this fact so that it is available for Members before the Chancellor opens his Budget?

Mr. Speaker: This is the first I have heard of it. I do not know whether any Member of the Government can shed any light on it. I notice there was always a slight delay in the past and steps taken later to remedy it.

Oral Answers to Questions — EMPLOYMENT

Prevention of Accidents

Mr. Janner: asked the Minister of Labour whether, in view of the fact that every year about 1,500 are killed and there are seldom less than 60,000 people away at any one time through industrial accidents, he will take steps in conjunction with the Royal Society for the Prevention of Accidents to deal further with this position, and to take the necessary precautions to reduce the accident rate.

The Parliamentary Secretary to the Ministry of Labour (Mr. Harold Watkinson): The factory inspectorate work in very close co-operation with the Royal Society for the Prevention of Accidents in promoting safety precautions and the avoidance of unnecessarily dangerous practices. They also give many lectures on safety matters to interested bodies, including trades councils and trade union meetings. For fuller information as to the action taken, I would refer the hon. Member to the annual report on the work of the Department published last month.

Mr. Janner: I have seen the annual report; but is the hon. Gentleman aware


that these accidents are costing the country something like £70 million a year by way of lost production? Will he consult with the Treasury to see whether they will restore to this Society the sum that they were receiving before or give them a larger sum in order that they may cope with the position?

Mr. Watkinson: The answer to that is that the rate per 1,000 employees of unavoidable accidents is falling progressively. It fell between 1944 and 1951 from 40 in 1944 to 23 in 1951.

Mr. H. Nicholls: Could my hon. Friend say if he has yet had the result of the inquiry into the establishment of the factory inspectorate, and if he has not will he speed up the report so as to get something on the move?

Mr. Watkinson: Yes. I know the interest my hon. Friend has taken in this matter, and I am glad to tell him that there is only one vacancy left in the basic grade of factory inspector.

Mr. Malcolm MacPherson: Although the rate has improved, is it not a fact that there are some individual industries which are still black spots? Has not the iron foundry industry an almost unenviable record in this connection, and will the hon. Gentleman consider the possibility of selecting individual industries for consideration to supplement the general campaign in industry as a whole?

Mr. Watkinson: I will look into that.

Agricultural Scientists and Workers (Call-up)

Mr. Hector Hughes: asked the Minister of Labour to make a comprehensive statement on the principles on which he acts in considering applications for deferment and extending deferment of agricultural scientists, experimentalists and research workers from military service during the pendency of their experiments and research in relation to agricultural food production.

Mr. Watkinson: Young men who wish to pursue post-graduate studies at a university or other recognised institution, in agricultural science or any other subject, are normally granted up to three years' further deferment of their calling up provided they would not thereby pass out of liability for National Service. In

addition, deferment, which may be indefinite, is granted to a few science graduates with high qualifications for employment on certain projects of the first importance and urgency; these include some agricultural scientists employed on projects important to food production.

Mr. Hughes: Has the Minister considered the particular case I sent him, and does he agree that the quantities of food which would result from the discoveries made by one agricultural scientist would naturally greatly exceed that produced by the work of one agricultural labourer, and will he in the national interest apply that principle to the particular case I have sent him?

Mr. Watkinson: I have considered the particular case the hon. and learned Gentleman has sent to me and I hope to write to him today.

Mr. N. Macpherson: asked the Minister of Labour how many agricultural workers in Scotland were registered for National Service in 1952; and how many were called up in the course of the year.

Mr. Watkinson: The first figure asked for is estimated at 2,500; the second is 924.

Agricultural Labour Officer, Northern Region

Mr. Bartley: asked the Minister of Labour if he will appoint an agricultural labour supplies officer in the Northern Region such as is employed in other regions, in order to facilitate the prompt engagement or re-engagement of all available agricultural labour in that region.

Mr. Watkinson: An officer to meet this need has been in post in the Northern Region since 1949.

Mr. Bartley: Is the Minister aware that his information is somewhat doubtful, as applying to the region as a whole? He will find that some localities in this region provide an officer for themselves but not for the region as a whole.

Mr. Watkinson: I think the answer to that point is that this is rather a large region. We are trying to meet that problem. For example, we are appointing a second officer in the Scarborough area for the potato harvest period.

Mr. Bartley: That reply scarcely answers my point. Scarborough is only a very limited area, whereas in the whole of the North-Eastern area there are very extensive agricultural areas to deal with.

Mr. Watkinson: I did answer the Question by saying that an officer had been in the post since 1949.

Hostel, Gloucester (Charges)

Mr. Turner-Samuels: asked the Minister of Labour whether he will make an early statement regarding the recent increases in charges at Brockworth Hostel, Gloucester, of 7s. per week, as from 13th April, 1953, and also regarding the discontinuance of the lodging allowance; and whether he has considered the effect of the representations made to him recently by the hostel residents that hardship will result for them, particularly for the lower wage groups, and that it will force a number of them to give up their present employment, with the consequence of creating further unemployment.

Mr. Watkinson: As regards hostel charges, I would refer the hon. and learned Member to the reply given by my right hon. and learned Friend to my hon. Friend the Member for Huntingdon (Mr. Renton) on 26th March. As regards lodging allowances, a decision of general application was taken over a year ago to limit the periods for which such allowances should be continued. My right hon. and learned Friend has examined sympathetically the representations from the hostel residents, but the decisions in question were arrived at only after the most careful consideration of all the circumstances, and I can hold out no hope of their being reversed.

Mr. Turner-Samuels: While thanking the Minister for that answer, may I ask him to take into consideration the financial difficulty and even the domestic hardship imposed on the residents at the hostel and to see whether he cannot take steps to relieve the situation?

Mr. Watkinson: We have looked into the matter very carefully. On the other side of the question is the point that we still have to subsidise these hostels to the tune of £1 million a year.

Mr. Philips Price: Seeing that this situation is likely to continue, may I ask the Minister to consider whether what he is doing may not have serious effects upon men working a long way from their homes?

Mr. Watkinson: The charges are still below the comparative charges for private lodgings.

Mr. G. Thomas: Mr. Speaker, for good or ill, it is quite impossible to hear what hon. Members are saying. I am not sure whether the amplifier apparatus is working.

Mr. Speaker: Some of the difficulty in hearing is due no doubt to hon. Gentlemen themselves carrying on conversations which, though they may sound quiet enough to the hon. Members individually concerned, amount in the aggregate to a considerable noise. To that extent hon. Members have the remedy in their own hands.

Brixton and Tooting

Mr. Gibson: asked the Minister of Labour the number of men on the unemployed register of the Brixton and Tooting employment exchanges; how many of these are over 45 years of age; and what is the average length of time they have been registered as unemployed.

Mr. Watkinson: As the reply includes a number of figures, I will, if I may, circulate it in the OFFICIAL REPORT.

Mr. Gibson: Is the Minister aware that there seems to be a growing difficulty for men over 45 to get employment, and that it seems to be growing considerably in South London? Can he say whether any special steps are being taken by his Department to try to find employment for these people?

Mr. Watkinson: It is fair to say that the figures show that, over 40 years of age, the difficulty of obtaining employment becomes much greater. The National Advisory Committee for the Employment of Older Men and Women, over which I preside, is trying to meet that problem.

Lieut.-Colonel Lipton: Would the hon. Gentleman have a word with the Chancellor of the Exchequer about this unhappy state of affairs, because it is the right hon. Gentleman's economic policies which are responsible?

Mr. Watkinson: Perhaps the hon. and gallant Gentleman will restrain his impatience for another half hour.

Following is the reply:

The total numbers of men aged 18 and over on the registers of the Brixton and Tooting employment exchanges at 16th March were 1,730 and 1,145, respectively. The latest date for which an age analysis is available is 8th December, 1952, when the total numbers of wholly unemployed men on the registers were 1,626 at Brixton and 1,072 at Tooting, of whom 881 and 664, respectively, were aged 40 or over. The numbers aged 45 and over are not separately distinguished in the returns. (The figures exclude a small number of "temporary stopped" and "casuals" unemployed for whom an age analysis is not available).

The average length of time for which the persons on the registers had been unemployed is not known, but the following table gives an analysis of the figures for 16th March, according to duration of unemployment:

NUMBER OF UNEMPLOYED MEN AGED 18 AND OVER ON THE REGISTERS OF BRIXTON AND TOOTING EMPLOYMENT EXCHANGES AT 16TH MARCH, 1953.


Duration of unemployment (in weeks)
Brixton Employment Exchange
Tooting Employment Exchange


8 or less
…
1,090
696


Over 8 and up to 13
…
178
142


Over 13 and up 26
…
256
179


Over 26 and up 52
…
117
97


Over 52
…
89
31


TOTAL
…
1,730
1,145

Pilchard Canning (Cornwall and Plymouth)

Mr. Hayman: asked the Minister of Labour how many persons employed in the pilchard canning factories of Cornwall and Plymouth are unemployed; and what are their prospects of early re-employment.

Mr. Watkinson: Fifty-six persons last employed in canning factories in these areas are registered as unemployed. The season for canning pilchards is closing and further employment in this industry will not be available until the autumn. I hope that alternative employment will be available shortly in the holiday trades.

Mr. Hayman: Will the Minister bear in mind that his answer will cause consternation in Cornwall and Plymouth, because of the eight canning factories six have already ceased operations and two are considering the position? According

to the season, 80 to 500 people are employed in the canning industry. Would the Minister consider the matter and ask his colleagues in the Cabinet to do the same, so as to help this important industry?

Mr. Watkinson: We shall certainly have a look at the problem again, but at the moment the amount of unemployment arising is not very serious, as I think the hon. Gentleman would agree.

Oral Answers to Questions — SCOTLAND

Reafforestation (Devastated Areas)

Mr. Woodburn: asked the Secretary of State for Scotland what steps he is taking to secure an addition to the afforestation programme of planting to compensate for the losses in growing timber caused by recent storms.

The Secretary of State for Scotland (Mr. James Stuart): It has been made a condition of all licences for the clearing of the devastated areas that they shall be restocked. It is not therefore proposed to accelerate on account of the storm the planned increase in the Commission's afforestation programme, which is being carried out as fast as available resources in land, labour and money permit.

Mr. Woodburn: Is the right hon. Gentleman aware that it may be five years before the devastated areas can be restocked, and that will be five years lost to timber growing? Is he also aware that there are still many places in the Highlands which are an eyesore to the countryside because they have not been replanted, and would this not be a favourable opportunity to have them replanted quickly?

Mr. Stuart: In conjunction with the very essential work of clearing up the damage due to the storm, every endeavour will be made by the Commission to keep up the programme of planting and replanting of the blown areas which, as the right hon. Gentleman knows, cannot begin immediately.

Lady Tweedsmuir: Is my right hon. Friend aware that the Scottish Conservator himself is advising all woodland owners that these areas must not be replanted for five years, owing to the weevil


pest? Is it not essential, as far as softwood is concerned, that planting in other areas should be undertaken?

Mr. Stuart: I agree that that is true, but so far as is possible we have to concentrate extra manpower upon clearing the blown areas in the first place.

Mr. Woodburn: Would the right hon. Gentleman not have a conference with the people concerned to see whether he can bring a more favourable report to the House?

Mr. Stuart: I am very ready to have a conference, and I have already had more than one in connection with this subject. I assure the right hon. Gentleman that we are getting on as rapidly as possible.

Major McCallum: Is the Minister satisfied that there are sufficient seedlings or seeds or young trees to carry out the extended programme, or is there only enough in the country for the present programme?

Mr. Stuart: I said in my first reply that, in so far as resources permit, we will push on.

Timber Houses

Mr. Manuel: asked the Secretary of State for Scotland how many timber houses were allocated to local authorities during 1952; and how many of these houses were completed by 31st December, 1952.

Mr. J. Stuart: Of the 3,000 houses authorised in April, 1952, 16 had been completed by the end of the year.

Mr. Manuel: Is the Minister aware that he certainly led Scottish local authorities to believe that they were to have 3.000 timber houses last year? He now tells us that only 16 are completed. What steps is he taking to deliver the rest of the 3.000 houses to local authorities within a measurable time?

Mr. Stuart: I did not say that 3,000 houses would be completed last year. On 2nd May, 1952, I said that the aim was to complete the whole programme by the end of 1953. I admit there has been delay. At the end of March, 1953, 123 houses were completed and 562 were under construction.

Mr. Hoy: Is it not a fact that, when the contracts were placed with these firms, one of the reasons given was that they would be able to carry out this work speedily? What action has the Secretary of State taken to see that they implement the pledge?

Mr. Stuart: I have already admitted that there was delay which I regret, but it was outside the control of Her Majesty's Government. There was a serious strike of Canadian lumbermen which held up the transport of timber.

Empty Buildings (Raring)

Mr. Grimond: asked the Secretary of State for Scotland if he will introduce legislation to allow of empty buildings being exempted from rates without the roofs being removed.

Mr. J. Stuart: I would refer the hon. Member to the reply given to a similar question asked by the hon. Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) on 10th March.

Mr. Grimond: Can the Secretary of State give an assurance that, if there is a general review of the Scottish rating system, he will see that it is tackled, because this practice leads to unsightly buildings being left standing?

Mr. Stuart: I will certainly give the hon. Gentleman that assurance in any review of the rating system. If he has specific cases which he would like to bring to my attention, I should be glad to consider them.

Mr. John MacLeod: Is the Minister aware that many tourists visiting the region say what a great scar these unsightly houses without roofs are against the magnificent Highland scenery and that some action should be taken about them?

Mr. Stuart: I have not seen the scars to which my hon. Friend refers and I am not aware of any number of cases of this nature in recent years, but I will gladly consider any cases in the future.

Mr. Stokes: May I ask whether the Secretary of State is aware that, if he rated siting values, he would get out of this difficulty?

Agricultural Land (Housing)

Mr. Patrick Maitland: asked the Secretary of State for Scotland whether he will take steps to ensure that all local authorities confine their housing schemes to houses of not less than three storeys, to minimise the encroachment on agricultural land.

Mr. J. Stuart: No, Sir. I take every opportunity of urging local authorities to minimise the use of agricultural land for housing purposes, but obviously varying local needs and circumstances cannot be ignored in determining the type and density of houses to be built.

Mr. Maitland: Is the Secretary of State aware that in Lanarkshire alone since the war more than 5,000 acres of agricultural land have been lost to local authority housing, whilst another 2,400 have been lost to the new town of East Kilbride and, furthermore, that flats as such are not unwelcome to those who are looking for fresh accommodation?

Mr. Stuart: I can assure my hon. Friend that I want to do everything possible to safeguard good agricultural land. The plans are closely scrutinised to avoid unnecessary encroachment upon it, and under the 1947 Act planning authorities are obliged to consult with the agricultural executive committees. I am afraid, however, that the suggestion is too rigid and therefore not practicable.

Mrs. Mann: Is the Minister aware that his reply will give very great satisfaction to most of the people in Scotland?

Mr. Maitland: Is the Secretary of State aware that his reply will be read with great interest by the people of Coalburn where the plots of old age pensioners are now threatened with building although there is vacant land available nearby?

Agricultural Labour Force

Mr. Patrick Maitland: asked the Secretary of State for Scotland to what he attributes the decline in the agricultural labour force in Scotland from 108,000 in June, 1948, to 99,000 in December, 1950, as disclosed by the Department of Agriculture for Scotland; and what steps he proposes to remedy this continued drift from the land.

Mr. Maitland: On a point of order. The second date in my Question should be December, 1952.

Mr. Stuart: I hope my hon. Friend will forgive me if I read the answer I have. I shall be ready to consider any alterations later.
No precise information is available as to the reasons for the decline in the agricultural labour force in Scotland, a fall which is by no means peculiar to that country. Some part of this general decline must be attributed to increased mechanisation and to normal seasonal variation. My right hon. Friend the Minister of Agriculture and I are considering possible steps to prevent any serious decrease in the force.

Mr. Maitland: While thanking my right hon. Friend for the reply as written, may I ask him whether he is aware that the continued drain of agricultural workers into the Forces under the call-up is encouraging the drift from the land, and will he continue to use his influence to the end that the agricultural call-up should be minimised as much as possible?

Mr. Stuart: Certainly, Sir. I would like to say to my hon. Friend that a proper comparison would be the month of June, 1948, with the month of June, 1950, or 1952, and I shall be glad to give him the figures if he wishes. The June, 1952, figure is 102,278.

Mr. Gooch: Does the Secretary of State agree that it might assist in preventing the drift from the land in Scotland if Scottish farmers were forced to pay the same wages as English farmers?

Mr. Stuart: That is a different question. [Interruption.] Well it is, it is simply not on the Order Paper. I have every reason to suppose that the wages paid in Scotland do not compare unfavourably.

Mr. Ross: Although the Secretary of State considers that this is a different question, surely the wages that are paid in Scotland, 10s.—[HON. MEMBERS: "5s."]—below those in England, have something to do with the decline in manpower in the Scottish agricultural industry?

Mr. Stuart: It is not necessarily the minimum wages that are paid in Scotland.

Hon. Members: Oh!

Civil Servants

Mr. Patrick Maitland: asked the Secretary of State for Scotland why, when the number of persons employed in the local government service in Scotland has declined from 68,000 in June, 1951, to 67,000 in June, 1952, the number of persons employed by the national government service shows an opposite trend; and whether he will take steps to reduce the number of civil servants employed.

Mr. J. Stuart: The figures to which my hon. Friend refers relate to national government service—excluding Her Majesty's Forces and Women's Services—and local government service as defined in the standard industrial classification and exclude large numbers of employees of both central and local authorities which appear in other tables. They do not therefore provide a true measure of the trend of total employment in either case. The total number of non-industrial civil servants in Scotland was practically the same in July, 1951 and July, 1952: in my own Department there was a decrease of 100 between these two dates. The number of civil servants is under constant review.

Mr. Maitland: Is the Secretary of State for Scotland aware that while what he has said will give some satisfaction, it would give still greater satisfaction if he could assure us that the number of civil servants is being drastically diminished, and that while Scottish devolution is welcome to people in Scotland, centralisation in Edinburgh is not?

Tuberculosis

Mrs. Mann: asked the Secretary of State for Scotland how many Scottish tubercular patients are receiving treatment outwith Scotland; where the sanatoria concerned are situated; what is the cost, per patient, in these sanatoria; and what is the corresponding cost in Scottish sanatoria.

Mr. J. Stuart: The present number receiving such treatment under National Health Service arrangements is 195, in three sanatoria in Switzerland. The average daily cost of treatment is about 30s., or 34s. 4d. allowing for transport and incidentals such as dental treatment. The average daily cost in Scottish sanatoria is about 23s. 6d.

Mrs. Mann: Could the Secretary of State say if there are—[HON. MEMBERS: "Speak up."] On a point of order, Mr. Speaker, I do not intend to speak up. I am sorry for interrupting hon. Members on the benches but, if they will stop speaking, they will hear my voice. Can the right hon. Gentleman say how many patients are being treated in Denmark?

Mr. Stuart: I believe that there are 12 Scottish children being treated in Denmark through the generosity of the Anglo-Danish Society.

Captain Duncan: Is my right hon. Friend aware of the shortage of doctors and nursing staff in tuberculosis hospitals in Scotland, and would it not be possible to do away with these shortages since it would mean a saving of the difference between 34s. and 23s, a day of the taxpayers' money?

Mr. Stuart: Yes, I am aware of that.

Mr. Woodburn: asked the Secretary of State for Scotland how far the eradication of tuberculosis in cattle is detrimental to human immunity from the disease; and whether he will give an authoritative report on the value of the attested cattle scheme in relation to public health.

Mr. J. Stuart: I know of no scientific foundation for any assertions that the eradication of tuberculosis in cattle is detrimental to human immunity from the disease. The number of new cases of non-respiratory tuberculosis in Scotland, which was largely of bovine origin, has fallen by more than 50 per cent. since the introduction of the Attested Herd Scheme.

Mr. Woodburn: Will the right hon. Gentleman try to give publicity to these facts, because there are in Scotland suggestions that the attestation of cattle is detrimental to success in eliminating tuberculosis from human beings?

Mr. Stuart: I will gladly give the fullest possible publicity.

Colonel Gomme-Duncan: Will my right hon. Friend go into this in more detail than his statement, in view of the figures produced by a qualified veterinary surgeon, which are causing a certain amount of disturbance in the public mind?

Mr. Stuart: Yes. I assure my hon. and gallant Friend that I will do what I can. Medical advice is to the effect that it is impossible to correlate the incidence of respiratory tuberculosis with the safety of the milk supply reaching the consumer. I have no reason to suppose that there is anything to support the theories to which the right hon. Gentleman and my hon. and gallant Friend have referred.

Mr. Woodburn: asked the Secretary of State for Scotland to what extent in the counties of Scotland with a relatively high incidence of pulmonary tuberculosis, a connection can be traced between that rate and the proportion of attested cattle in the same area.

Mr. J. Stuart: The increase in the number of new cases of respiratory tuberculosis notified since 1939 is due to a variety of causes, including better means of diagnosis, which cannot be precisely assessed. Good progress has been made with the eradication of tuberculosis in cattle, but I am advised that the coincidence of such progress with increased respiratory notifications in several areas in no way establishes a relationship of cause and effect.

Mental Institutions (Old People)

Mrs. Mann: asked the Secretary of State for Scotland how many patients over 60 years of age were admitted to mental institutions in Scotland as lunatics during 1950, 1951 and 1952.

Mr. J. Stuart: Nine hundred and six patients over 60 years of age were admitted to Scottish mental hospitals as certified patients during 1950. Corresponding figures for 1951 and 1952 are being compiled and I will send them to the hon. Lady as soon as possible.

Mrs. Mann: Could the right hon. Gentleman say whether the figures are not greatly increasing, and whether these old people are really lunatics or are merely being certified as lunatics in order to gain admittance?

Mr. Stuart: My information is that under the operation of the law, which is very strict, no patients can be certified improperly, and I hope the contrary is not the case. I cannot answer the first part of the question, but I shall be glad to let the hon. Lady know the answer.

Mr. Hector Hughes: Can the Secretary of State say how many certified lunatics were refused admission to these institutions, and why, and where they are now?

Mr. Stuart: Perhaps the hon. and learned Gentleman will put down a Question on that point?

Neo-Natal Death Rate

Mrs. Mann: asked the Secretary of State for Scotland the rate for neo-natal mortality in Social Classes I to V during 1950, 1951 and 1952.

Mr. J. Stuart: I regret that the information for 1952 is not yet available, but I will, with permission, circulate the figures for 1950 and 1951 in the OFFICIAL REPORT.

Following are the figures:


Social Class
Neo-natal Death Rate per 1,000 Live Births




1950
1951


I
…
20·0
14·6


II
…
16·5
15·2


III
…
22·7
22·1


IV
…
24·9
23·3


V
…
28·5
29·7


All Classes
…
23·0
22·3

Oral Answers to Questions — WAR DISABLED PENSIONERS (ALTERNATIVE PENSIONS)

Mr. G. Thomas: asked the Minister of Pensions the number of 1914–18 war disabled pensioners now in receipt of alternative pensions.

The Minister of Pensions (Mr. Heathcoat Amory): About 400.

Mr. Thomas: How many, therefore, are not in receipt of these alternative pensions?

Mr. Amory: All those who are not in receipt of the alternative pension are in receipt of the standard pension.

Mr. Thomas: What is the number?

Mr. Amory: I do not have the number with me, but if the hon. Member puts down a Question I will let him have that information.

Mr. G. Thomas: asked the Minister of Pensions for an estimate of the cost of granting to the 1914–18 war disabled pensioners the increase of 15s. per week granted to those in receipt of basic pensions.

Mr. Amory: I assume that the hon. Member refers to disablement pensioners in receipt of alternative pensions. The estimated cost of applying the basic pension increases to disablement alternative pensions would be about £15,000 a year.

Oral Answers to Questions — BRITISH ARMY

Gift Parcels (Customs Duties)

Mr. McKibbin: asked the Secretary of State for War whether he will issue instructions to commanding officers of units serving overseas to warn all ranks under their command that certain articles are liable to duty and should not be sent home as gifts, in view of the fact that in many cases recipients suffer hardship in paying the duty.

The Secretary of State for War (Mr. Antony Head): Special instructions about this matter have been sent out four times in the last two years. The necessity for seeing that all officers and men were made aware of the contents of these notices was particularly stressed.

Mr. McKibbin: Is my right hon. Friend aware that in spite of this the troops do not seem to understand the regulations regarding Customs charges on goods other than cigarettes and whisky not exceeding £1 in total value? Is he aware that recently I had a case with the Chancellor of the Exchequer when a soldier serving abroad sent home a packet value 21s. 6d., and because there was 2s. worth of cigarettes in the packet the unfortunate recipient had to pay 21s. 3d. duty?

Mr. Head: I do not know about the individual case but I think that men are aware that they are sending goods which may be liable to duty because they have to fill in a form, which is a label, making a Customs declaration when they send the parcel. They are, therefore, automatically aware of that fact.

Major Legge-Bourke: Will my right hon. Friend bear in mind that some of us feel that men serving overseas ought

to be allowed to send in goods duty free to their relatives from overseas to a far greater extent than is at present allowed?

Mr. Head: That is another question, but I should say that the amount duty free has been increased by the Treasury quite recently from 10s. to £1.

Korea (Local Overseas Allowance)

Brigadier Clarke: asked the Secretary of State for War why married officers and other ranks serving in Korea are not entitled to separation allowance at the recently announced rates.

Mr. Brockway: asked the Secretary of State for War if he will extend the increased marriage allowance for soldiers separated from their homes to men serving in Korea; and if he will consult with the Chancellor of the Exchequer with a view to exempting them from Income Tax.

Mr. Head: The allowance to which my hon. and gallant Friend refers is not a separation allowance but is an increased local overseas allowance for the married unaccompanied officer or soldier to meet the extra expenses when serving at a high cost overseas station. It applies, therefore, only to areas where local overseas allowance is paid. The allowance is tax free.

Brigadier Clarke: Does my right hon. Friend not feel that this privilege should be extended to all serving men, especially to those fighting for the free world and now serving in Korea?

Mr. Head: The object of this allowance is to compensate men who might normally expect to have a married quarter and who have not got one owing to various difficulties. I do not think that a man serving in Korea would expect his wife to be in that theatre in married quarters.

Mr. Shinwell: Is the local overseas allowance which is paid to officers and men serving in Korea higher or lower than the local overseas allowance which is paid to officers and men in Belgium?

Mr. Head: There is no local overseas allowance in Korea.

Mr. Shinwell: I understood from the right hon. Gentleman that his reference to separation allowance meant overseas allowance.

Mr. Head: No; there is no separation allowance either. All that there is is a local overseas allowance in certain theatres and a married local unaccompanied allowance as supplementary to the local overseas allowance, for men who are married and separated.

Mr. Shinwell: Will the Secretary of State for War be good enough to say whether the officers and men serving in Korea are entitled to the same privileges as are afforded to the officers and men serving in Belgium?

Mr. Head: If the right hon. Gentleman is referring to this' matter of local overseas allowance, the answer is "No," because there is no local overseas allowance in Korea, and never has been.

Mr. Fenner Brockway: In view of the right hon. Gentleman's statement that the men in Korea understand the reason for this, may I ask whether his attention has been drawn to the statement of the Roman Catholic Bishop of Leeds following a visit to Korea that both men and officers are very bitter about this matter?

Mr. Head: I was not aware that I claimed that every man there understood it, and I well appreciate that every man would like to have this allowance. I repeat, however, that it was intended for single men in stations which were expensive, and where there was local overseas allowance that that amount should be made up for them for their married status because they had a home to keep up in this country or elsewhere.

Mr. Nicholson: There has been a great deal of misunderstanding about this so-called separation allowance and my right hon. Friend's answers today have done very little to clarify it. The impression still remains that the wives of men serving in Korea are less favourably placed than the wife of a man serving in, for example, Malaya.

Mr. Head: The object of this allowance was that a man stationed in an expensive station, where a local overseas allowance was justified by a high cost of living, should have an extra amount, so that in living his single life he should not be at a disadvantage in relation to a bachelor because he had another home to keep up in England or elsewhere.

Mr. Beswick: Whatever the object may have been, does not the Secretary of State agree that an injustice has been created, and will he look into this matter again?

Mr. Head: No. I do not think anybody would argue that the actual cost of living in Korea is very high; there is practically nothing upon which to spend money. That is why there is not a local overseas allowance. Based on that, I do not think it is unfair.

Mr. Brockway: On a point of order. The right hon. Gentleman has answered Question No. 26 with Question No. 23, but he has not answered the second part of Question No. 26.

Mr. Head: I did say at the end of my reply that the allowance is tax free.

Mr. Brockway: Further to that point of order. The second part of the Question does not only refer to this separation allowance. May I ask the right hon. Gentleman whether in the next half hour he will consult with the Chancellor of the Exchequer on this matter?

Mr. Speaker: There is no point of order there for me.

N.A.A.F.I. Prices, B.A.O.R.

Mr. Janner: asked the Secretary of State for War the price at which Libby's tinned milk is sold in the Navy, Army and Air Force Institutes' stores in the Ruhr.

Mr. Head: One shilling and sevenpence for a 16 oz. tin.

Mr. Janner: Is the right hon. Gentleman aware that in England the price is 1s. 5d. and the price in the ordinary shop in Germany is less than that amount? Can he explain why a Service man in Germany has to pay more at the N.A.A.F.I. stores than he would pay for the same commodity at an ordinary store in England or in Germany?

Mr. Head: I understand that the extra 2d. is for freight, insurance and handling costs from this country to Germany. The local product in Germany, I am informed, has a much lower fat content than that manufactured in this country and is less satisfactory.

Mr. Janner: asked the Secretary of State for War if he is aware that tea and coffee are rationed to Service men and their wives in the Navy, Army and Air Force Institutes' stores in Germany; and if he will give his reasons for such rationing.

Mr. Head: The Commander-in-Chief, in his routine orders, has limited the weekly sales of tea and coffee to reasonable amounts because the Forces, having imported these articles into Germany free of duty, are under obligation to prevent their misuse by sale or barter.

Mr. Janner: Is the Minister aware that there is an ample supply in Germany of all these commodities outside the amount allowed to Service men and that there is no question of a black market in regard to this now? Why on earth should he allow one tin of Nescafe only to a Service man's family and ration tea and coffee when there is an ample supply in Germany? The Service men are very seriously concerned about this matter.

Mr. Head: May I point out to the hon. Member that the N.A.A.F.I. price of coffee is 7s. per lb. and the local price in Germany is 20s.? That is the situation. If I allowed unlimited supplies of coffee to go it would be asking a lot of housewives and others not to sell it to the Germans.

Film (Argyll Regiment)

Mr. Emrys Hughes: asked the Secretary of State for War to give details of the financial arrangements under which soldiers of the Argyll Regiment were used in the film production of "Rob Roy" by Mr. Walt Disney; and what other similar engagements have been undertaken.

Mr. Head: The financial arrangements were such as to prevent either cost falling upon public funds or undercutting of the civilian labour market. Similar engagements have often been undertaken in the past when the request was reasonable and could be readily met.

Mr. John MacLeod: On a point of order. Does this refer to the Argyll and Sutherland Highlanders? Which Argyll Regiment is referred to in the Question?

Mr. Speaker: That is not a point of order.

Mr. Hughes: Is the right hon. Gentleman aware that Mr. Walt Disney is so satisfied with these financial arrangements that he is trying to make a new film of "The Big Bad Wolf" and have the Chancellor of the Exchequer in it?

Carpets (Expenditure)

Mr. Emrys Hughes: asked the Secretary of State for War to make a statement of his expenditure of £670,000 on carpets, stating, in particular, how much expenditure was incurred in Scotland and for what purposes.

Mr. Head: This expenditure by Army Commands on carpets has been described in some detail in the Comptroller and Auditor-General's report on the Army Appropriation Account, 1951–52. Of the total, some £17,000 was spent in Scotland on the purchase of carpets, stair-carpets and underfelt for furnishing married quarters, messes, etc.

Mr. Hughes: Is the right hon. Gentleman aware that this seems a very large sum and shows no sign of economy being practised in the War Office? Can he give a really satisfactory reply to the comments of the Comptroller and Auditor-General on this matter?

Mr. Head: The orders for these carpets were placed under the late Administration; I cannot take responsibility for that. But so far as the details are concerned, they will, of course, be gone through by the Accounts Committee subsequently and a full answer will no doubt be given.

Mr. Nabarro: Is my right hon. Friend aware that the serious feature of these transactions is the fact that the great bulk of the carpets were of foreign origin? In future would he please assure us that such carpets are bought in Kidderminster and in the other carpet manufacturing centres of the United Kingdom, and that the British Army supports the principle of "Buy British"?

Mr. Head: I am not aware that a large quantity of foreign carpets was purchased. I do not believe that to be true, but I will certainly look into it; and I realise that certain other types of carpets may be regarded as foreign in Kidderminster.

Oral Answers to Questions — TRADE AND COMMERCE

Canned Pilchards

Mr. Hayman: asked the President of the Board of Trade what steps he is taking to reopen the closed South African and Australian markets to Cornish canned pilchards.

The Secretary for Overseas Trade (Mr. H. R. Mackeson): It was generally agreed at the Commonwealth Economic Conference that import restrictions imposed by a Commonwealth country for balance of payments reasons should be relaxed as its external financial position improved. In the present state of their balance of payments, neither South Africa nor Australia has found it possible to remove the restrictions on the importation of canned pilchards, but Australia has recently raised the quota.

Mr. Hayman: Will the Minister bear in mind that South African imported canned pilchards are ruining the home pilchard canning industry? Will he therefore do all he can to allow as big imports as in the past to Australia and South Africa?

Mr. Hayman: asked the President of the Board of Trade for what period an open general licence for the import of South African canned pilchards was sanctioned in 1952; and what are his plans for these imports in 1953.

Mr. Mackeson: Imports of canned pilchards from South Africa were not admitted under open general licence at any time during 1952 but licences were granted freely to individual importers. It is our intention to continue to admit freely these imports from South Africa.

Mr. Hayman: Will the Minister bear in mind that these imports were on a huge scale, that the South African canned pilchard was of such poor quality that it was unable to retain the Malayan market, and that the pilchard canning industry at home and the fishing industry itself are seriously threatened by these huge imports? Will he reconsider his policy for 1953?

Mr. Mackeson: The answer is that neither this Government nor its predecessor used import licensing restrictions to protect domestic industries. We do so to protect the balance of payments. If

this industry has a case it wants to put forward for an increase in tariffs, of course it will have sympathetic consideration.

Anglo-Brazilian Trade

Mr. K. Thompson: asked the President of the Board of Trade if he will make a statement about the progress of the talks between Her Majesty's Government and the Government of Brazil on the question of Brazil's indebtedness to this country.

Mr. Mackeson: There have so far been no formal discussions between Her Majesty's Government and the Government of Brazil on this question. As I said in reply to my hon. Friend's Question on 22nd January, we have had certain exchanges of views with the Brazilian Ambassador in London, and Her Majesty's Ambassador in Rio de Janeiro has also had informal talks with the Brazilian authorities. But I hope to make a statement on this subject very shortly.

Mr. Thompson: Would my hon. Friend bear in mind that this is a matter of very great importance, which is causing considerable anxiety to British exporters to Brazil, many of whom have large sums of money tied up in commodities they have sent out there already? Will he do his best to expedite these discussions and his statement to the House?

Mr. Mackeson: Yes, Sir. My right hon. Friend is well aware of that.

Oral Answers to Questions — NATIONAL FINANCE

Members' Salaries (Sickness Benefits)

Sir J. Mellor: asked the Chancellor of the Exchequer if he will introduce legislation to require Members of this House, who, in any period, receive both sickness benefit and Parliamentary salary, to surrender the amount of the former to the Exchequer.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I would suggest that this matter should be left on the basis that a Member will decide, in the light of his individual circumstances, whether it is proper for him to draw his full Parliamentary salary


in respect of any period when he is drawing sickness benefit from the Ministry of National Insurance.

Sir J. Mellor: Would my hon. Friend agree that this is not merely an academic question, as I have drawn his attention to a particular case? Will he also agree that persons paid through public funds are not generally permitted to draw both pay and sickness benefit and that it is quite wrong for Members of Parliament to be treated as an exception?

Mr. Boyd-Carpenter: I do not think it is any part of my duty to comment on the general issue to which my hon. Friend refers.

Mr. Callaghan: Would the hon. Gentleman consider suggesting to hon. Members who enjoy substantial private incomes that it would be seemly for them to keep quiet on the subject of Parliamentary salaries?

Mr. Boyd-Carpenter: I do not think that either is any part of my duties.

Mr. S. Silverman: Is the Financial Secretary to the Treasury aware that the hon. Member for Sutton Coldfield (Sir J. Mellor) is quite wrong in thinking that there is anything in the general law of the land which is hostile to a sick man getting his full salary from his employer and still getting the insurance benefits for which he has paid his weekly contributions? In view of that, will the Financial Secretary say what the saving to the Exchequer would be if this very mean proposal were adopted, and whether he has had from the 1922 Committee any proposals which are more constructive than this for slashing Government expenditure?

Mr. Boyd-Carpenter: I have answered the Question on the Paper, and I do not think it would be helpful if I pursued the matter along the avenue which the hon. Gentleman opens to me.

Sir J. Mellor: In view of my dissatisfaction with the answer given, I propose to raise the matter on a future occasion.

Arrested Nazi Leaders (Financial Aid)

Mr. Hoy: asked the Chancellor of the Exchequer if he is aware that British citizens have transferred sterling for the financial assistance of Walter Naumann

and other German Nazis; and if he will refuse permission for any such transfer of sterling in the future.

The Economic Secretary to the Treasury (Mr. R. Maudling): No application has been made to the exchange control authorities to transfer funds for this purpose, nor would I approve applications for purposes which are inconsistent with the national interest.

Mr. Hoy: But is not the hon. Gentleman aware that the German Chancellor, in a speech in Bonn, stated that Walter Naumann and the other associates were receiving financial aid from Sir Oswald Mosley; and can the hon. Gentleman give the House any information as to where this money is coming from?

Mr. Maudling: I understand that Sir Oswald Mosley is a resident of Eire, and therefore not subject to our exchange control. So far as any United Kingdom subscriptions are concerned, I am grateful to the hon. Member for the opportunity to make the position clear, as I have done.

Sir H. Williams: Can my hon. Friend say whether the Sir Oswald Mosley who has been mentioned is the gentleman who was a Member of the Labour Government in 1930?

Dominions and Colonies (Gifts and Loans)

Sir J. Lucas: asked the Chancellor of the Exchequer the total amount of free gifts from the Dominions and Colonies to this country, both during and since the late war, respectively; and the amount of interest-free loans.

Mr. Maudling: As the reply contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Sir J. Lucas: In view of the fact that these figures are bound to be absolutely magnificent, will my hon. Friend do his best to make them well known in the country; and will they include also the large amounts given for the Red Cross and in food parcels?

Mr. Maudling: I agree with my hon. Friend as to the importance of making these figures widely known. I am sure that the Question which he has asked will help in that direction.

The amounts are as follows:


—
£ million





During the war
Since the war


From the independent Commonwealth countries:






Gifts
…
…
225
46


Interest-free loans
…
…
163
—


From the Colonies:






Gifts
…
…
22
—


Interest-free loans
…
…
16
2

These figures cover only cash receipts by the United Kingdom Government. They do not, therefore, include gifts or loans in the form of goods and services, of which the value in most cases cannot be accurately computed. Outstanding examples of such assistance are Canadian mutual aid during the war, estimated to have been worth about £400 million, and the air training schemes in Canada, South Africa and Southern Rhodesia.

Oral Answers to Questions — CEMENT DUST NUISANCE, KENT

Mr. Dodds: asked the Minister of Housing and Local Government (1) if, in view of the public feeling over a large area in Kent consequent upon the heavy covering of cement and other forms of dust, he will arrange for, or co-operate in, a public inquiry in an effort not only to find a solution to the problem but also to show to the public concerned that everything possible is being done to deal with a situation that has caused much damage and distress:
(2) if, in view of the heavy deposits of cement dust over a wide area of North-West Kent, he will make use of his powers under Sections 23, 76 and 100 of the Town and Country Planning Act, 1947, to deal with a situation that is causing distress and cost to many people.

The Minister of Housing and Local Government (Mr. Harold Macmillan): I am aware that the nuisance from cement dust in this area has been aggravated in recent months by the failure of five of the dust precipitators at the works. Two have now been repaired; a third will be ready in April and a fourth in June. My inspectors have the matter in hand and energetic steps are being taken to reduce emissions to the practicable minimum. The Alkali &c. Works Registration Act, 1906, provides effective statutory powers.

and I do not think that action under the Town and Country Planning Act, 1947, or a public inquiry, would assist.

Mr. Dodds: Is not the right hon. Gentleman aware that this cement dust nuisance, extending over miles, has been worse in March than it has ever been before? Is the right hon. Gentleman satisfied, in these days of wonderful inventions, when tens of thousands of people in the Garden of England have to be under this cloud of cement dust? Will he not do something more about it than he has just stated?

Mr. Macmillan: Everything is being done to put the machinery in order. When it is in order, I believe that this matter will be satisfactorily settled.

Oral Answers to Questions — HOUSING

Council Houses (Sale)

Mr. D. Jones: asked the Minister of Housing and Local Government if he will circularise all local authorities who are housing authorities, with a view to obtaining information as to the number of authorities who have offered their houses for sale; the total number of houses so offered; and the number of applications they have received.

Mr. H. Macmillan: I hardly think it worth while to send a circular to 1,470 local authorities at this stage. Inquiries have been made informally of about 250 housing authorities of all types, and these show that nearly 60 per cent. have decided to offer houses for sale, 20 per cent. are unwilling, and the rest are still undecided. Few houses have been sold yet, but several hundreds of tenants have asked to be allowed to buy, and I understand that many more are considering purchase.

Mr. Jones: May I ask whether the right hon. Gentleman realises that the information which he is likely to get will be of great interest to the people of this country, or whether he is afraid that if he circularises the authorities the answer will not be satisfactory?

Mr. Macmillan: I am not sure what the hon. Member wants. Does he want more houses sold, or fewer?

Rent Restriction Acts

Brigadier Medlicott: asked the Minister of Housing and Local Government how soon he anticipates being able to make a statement of Government policy in relation to the amendment of the Rent Restrictions Acts.

Mr. H. Macmillan: As soon as maybe, having regard to the complicated and difficult questions involved.

Brigadier Medlicott: Is my right hon. Friend aware that his statement will be awaited with the same calm confidence with which we await all statements of this Government's intentions?

Resale Price Control

Brigadier Medlicott: asked the Minister of Housing and Local Government how soon he anticipates being able to make a statement of Government policy regarding the lifting, modifying or re-imposing of the restrictions on the price and rent of houses constructed under building licences, bearing in mind that the present restrictions are due to expire on 19th December, 1953.

Mr. H. Macmillan: I hope to make a statement on this matter before the end of the session.

Oral Answers to Questions — DEFENCE EXPENDITURE

Mr. Emrys Hughes: asked the Parliamentary Secretary to the Ministry of Defence if, in view of the fact that the expenditure on defence greatly exceeds expenditure on the Health Services and that an independent committee under the chairmanship of an economist has been appointed to inquire into the latter services, he will now order an independent inquiry of a similar nature to examine defence expenditure.

The Parliamentary Secretary to the Ministry of Defence (Mr. Nigel Birch): No, Sir.

Mr. Hughes: Is the Parliamentary Secretary aware that there have been

several very adverse reports on defence expenditure by the Auditor-General, and does he not think it just as necessary to economise on these items of expenditure as on the Health Services?

Mr. Birch: I entirely agree that it is necessary to make all possible economies on defence, and we try to do so.

Lieut.-Colonel Lipton: Has the Parliamentary Secretary investigated the fascinating possibilities of earning large sums of money and thus reducing defence expenditure by the further hiring of troops to film companies for the purpose of making films in Scotland and elsewhere?

Oral Answers to Questions — CIVIL DEFENCE CORPS (STATUS)

Mr. Lewis: asked the Secretary of State for the Home Department whether he has considered the letter from the Secretary of the Institute of Civil Defence drawing his attention to the terms of two resolutions passed at the annual meeting of this institute asking that the existing, warrant of Her Majesty's Secretary for Home Affairs should be withdrawn and replaced by a Warrant of the Crown raising the status of the service to that of The Royal Civil Defence Corps and asking that the requisite authority and recognition should be given to the Civil Defence Corps as a national emergency service; what has been the nature of his reply; and whether he will make a statement.

Mrs. Braddock: asked the Secretary of State for the Home Department whether he has given consideration to the suggestion of the Institute of Civil Defence, in a resolution sent to him, ICD 704/15, that the status of Civil Defence should be raised to Royal Civil Defence Corps; and what action he is taking in this matter.

The Secretary of State for the Home Department (Sir David Maxwell Fyfe): I have received the letter referred to and have replied that the matters it contains are receiving consideration.

RAILWAY ACCIDENT, STRATFORD

Mr. Lewis: (by Private Notice) asked the Minister of Transport if he has any statement to make in connection with the railway accident that occurred on Wednesday, 8th April, at the Stratford Central Line railway station.

The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite): Yes, Sir. At about 6.55 p.m. on Wednesday, 8th April, an east-bound passenger train on the London Transport Central Line ran into the rear of a similar train which had stopped about 400 yards east of Stratford station. The first two coaches of the moving train were partly telescoped and were pressed against the sides and roof of the single-line tube tunnel.
I regret to say that 10 passengers lost their lives and six passengers and the motorman of the moving train received serious injuries. I am glad to hear today that the injured are progressing satisfactorily. About 41 others were slightly injured. The relief work undertaken by the London Transport Executive's staff and the local emergency services was most efficient, but the conditions in the restricted space were so difficult that the last two injured passengers could not be released until about 4 a.m. on the following morning.
A formal inquiry will be opened in public by an inspecting officer of railways on Thursday next, 16th April, and the House will appreciate that I cannot make any further statement at present. The London Transport Executive have announced that they will accept liability for all proper claims for compensation.
All right hon. and hon. Members will, I am sure, wish to be associated with an expression of deep sympathy with the relatives and friends of those who lost their lives and with those who were injured.

Mr. Lewis: While thanking the Minister for his comprehensive statement and wishing to be associated with the message of sympathy to the relatives of those who unfortunately lost their lives, may I ask if the Minister is aware of the gallantry of those who took part in rescue work under the most appallingly difficult conditions? Is he further aware of the gallantry and heroism shown by the

whole of the medical and nursing staff of Queen Mary's Hospital, Stratford, and particularly of the two nurses who volunteered to go into the tunnel to sit with two of those who had suffered and give them comfort? Will he bear in mind the possibility of that fact being recorded and mentioned in the appropriate quarter, so they may be considered for some suitable honour at a future date?

Mr. Braithwaite: My reply, which expressed appreciation of the work of all the emergency services, was intended to cover all those who played so admirable a part.

Mr. Sorensen: In view of the fact that one of the dead and five of the injured came from my constituency, may I ask whether the reference by the Parliamentary Secretary to liability being accepted by British Railways covers loss of life as well as other kinds of compensation?

Mr. Braithwaite: I do not wish to go beyond the answer I have given, that proper claims for compensation will be met.

CORONATION AMNESTY (DETAINED SOLDIER)

Mr. Logan: I am anxious to know what my attitude ought to be today, Mr. Speaker, and I ask your guidance. Before the Recess I asked an important question regarding the release of a soldier who would be imprisoned until 24th April. The question has not been answered. Am I to wait until the man has served his sentence, or do the words which were expressed to me before we left mean anything, that the matter would be considered and I would receive a letter? The wife of the man is waiting anxiously, and if her anxiety was shared by the Minister I should have received a reply by now.

Mr. Speaker: I cannot answer the question of the hon. Member, but I will consider what he has said to see if I can help him in any way.

NEW MEMBERS

Roy Mason, esquire, for Barnsley.

Mrs. Harriet Slater, for Stoke-on-Trent, North.

Arthur Massey Skeffington, esquire, for Hayes and Harlington.

Orders of the Day — WAYS AND MEANS

Considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

BUDGET PROPOSALS

3.36 p.m.

The Chancellor of the Exchequer (Mr. R. A. Butler): When I opened my first Budget some 13 months ago, I began, as is customary, with a review of the previous year. The account I gave was as objective as I could make it and was inevitably a bleak one, a story of mounting deficits overseas and of inflation at home. The difference today is very striking.

EXTERNAL POSITION

Let me first take the main achievement. The last Budget was designed primarily to rectify the adverse balance of payments. The measure of our success can be judged by the figures, which speak for themselves. The United Kingdom balance of payments on current account changed from a deficit of £398 million in 1951 to a surplus in 1952 of no less than £291 million. The figure of £291 million surely comes very near the figure of £300 million which, when I announced it to the O.E.E.C. in Paris as the surplus which we ought to aim at, year in and year out, was regarded by the cynics as stargazing.

Yet we have almost reached that figure. But, as I shall show, I am not content. We must keep up the progress. We must not forget that last year we were helped by United States defence aid. We received £121 million and we are grateful for it. I am sure the Committee would like to join with me in expressing that gratitude and acknowledging that it makes a big difference. Even if defence aid is excluded, the improvement between the calendar years was of an order of which the Committee can be proud—£572 million between 1951 and 1952.

Now, taking the financial years, in my last Budget speech I said that we must work for an improvement of £600 million between the two years. I am quite confident that we have, in fact, done better than that. With this has come a most welcome improvement in the state of our

gold and dollar reserves, from the desperately low level they had reached. The drain on them ceased soon after the last Budget. Throughout the summer, they held steady. In the last quarter of 1952, they rose significantly; yet in that quarter we made the payments due on the United States and Canadian loans. The rise has continued this year; at the end of last month the reserves stood at £774 million, an improvement over the 12 months of £167 million. These results represent an achievement of which the Committee and the country—and indeed the whole of the sterling area—can be justly proud.

Though there is still much to do, we have made a good start which it will take all the courage and confidence we can muster to maintain. Of course, there were events outside which aided and supported the benign influences of Government policy. Our economy, like our island climate, is always exposed to changes in the world economic weather, which are, to a large extent, outside our control. Last year, changes abroad, including the movement in our favour of the terms of trade, were particularly striking. Here things turned out better than our expectations. At any rate, events have shown that the general course we set was right. By our internal policies, we added that vital element—confidence in sterling—without which all our other efforts would certainly have been frustrated. I shall give my reasons for this in the remainder of this preliminary review.

Now for a word on what happened in the field of our external problems. Hon. Members will remember that we first set about reducing our bill for imports. Part of this we sought to do by cutting down their volume; the rest we expected to achieve as a result of a fall in their price. In the event, the change in the terms of trade—the fall in the price of our imports compared with the price of our exports—was greater than we expected. As a result, owing both to our stringent cuts and to reduced costs, our import bill was £569 million less in 1952 than in 1951.

At the same time, however, the cost of our military commitments overseas increased, while our income from overseas enterprises declined. Chiefly because of this, our invisible earnings declined during the year by £85 million, instead of rising as we had hoped.

The remaining part of our task was to increase our earnings from exports. I put the likely export difficulties plainly before the Committee last year. I warned them of the restrictions which our partners in the sterling Commonwealth had to impose in their own and the common interest; of the falling-off in world demands for consumer goods, especially textiles; of the return of keen competition in world markets; and of the conflicting claims of home investment and a rising defence programme for the goods most in demand overseas, namely, the products of our metal-using industries.

As I told the Committee last year, this called for a major diversion of effort, so I sought to frame last year's Budget and the new monetary and credit policy in order to shape the proper course, not only to improve the balance of payments, but also to achieve our other objective—the checking of internal inflation.

CONDITIONS AT HOME

Since overseas demand for consumer goods showed signs of declining, I came to the conclusion that unduly to depress the level of consumer demand at home would be unnecessary and harmful. There was some quite reasonable criticism of my judgment at the time, but despite that, things have turned out very much as I expected. Although the volume of consumption remained low in the earlier part of 1952, it showed signs of increasing towards the end; over the financial year as a whole, it was probably about level with the previous year.

At the same time, as the Committee will remember, I came to the conclusion, with much regret, that I must keep down the demands, mainly for home investment, on the metal-using industries, in order to free resources not only for increased defence production, but also for an increased volume of exports in this class of goods. In the event, there was a slight fall in fixed investment; that is to say, in new factories built, new plant and machinery installed, and so forth. This was partly offset, as I forecast, by an increase in other building work, largely the result of the great energy and drive shown by my right hon. Friend the Minister of Housing and Local Government. I am sure we are all glad to see him back well again with with us.

There was, however, a most significant change in the other form of investment—investment in stocks of finished goods and work in progress. In 1951, there had been a substantial increase in this kind of investment, following smaller increases in early years. In 1952, partly as a result of our monetary policy, this increase stopped, so that during the year the volume of stocks and work in progress in the United Kingdom seems to have remained about level. It is not correct to say that these stocks declined. The fact that stocks remained about level in 1952 meant a considerable fall compared with the previous year in this form of demand upon our productive capacity. This—and I want the Committee to note this—more than outweighed the increased claims of defence production, which were a little greater than we expected. The net result was a considerable reduction of total home demand, and the freeing of resources for export. In this way, our policy at home made its contribution to the task of our exporters.

But when the exporters came to sell abroad many of them met with the difficulties I have already mentioned. Exports to the sterling area, and of consumer goods generally, fell. We sold a little more in non-sterling markets, particularly in the dollar areas, while at the same time the value of our exports of metal and engineering goods rose considerably, partly as a result of our policy of limiting home demand in the metal-using industries. In all, we succeeded in getting an increased income from exports during the year. This was, however, due to higher prices; the volume of our exports, instead of showing a small increase, as we hoped, declined. This, taken with the decline in home demand I have already mentioned, meant that there was a considerable decline over the year in the total demands on our productive capacity.

Leaving aside for later consideration our serious export difficulty, the general easing of demand transformed the aspect of our economy. Although there were still a few difficult patches, over the economy as a whole the menace of inflation through excessive demand was lifted. With our monetary and other policies working, as I have tried to show, with the tide of economic forces, we had brought a new flexibility into our affairs. This


showed itself in many ways. We were able to get some better adjustments of our resources of manpower; more men went into the coal mines, and into the aircraft and other defence industries.

We were especially satisfied that, in this and other ways, employment was maintained far more successfully than some of our critics forecast. But we were on the watch all the time for the effect on production. It was inevitable that this should be affected, and as the Committee know, some drop did take place, due both to the shortage of steel and to the falling off in demand, particularly for textiles and other consumer goods. But the measures taken at the time of the last Budget—and hon. Members will remember our discussions on the textile depression—helped to bring about a recovery, by the end of the year, both in production and in areas of unemployment.

Much has still to be done, as I shall show, for production and exports; but great advances were made in the course of the year in bringing back a sense of reality into our economic affairs and in freeing everybody—manufacturers, traders and consumers alike—from restrictions and controls. We were able to return to private hands trading in a number of commodities—lead, zinc, tea, timber, fertilisers and others. In consultation with the farmers, we started on the process of bringing greater freedom to agriculture without upsetting—and, indeed, enhancing—the importance of the drive for greater production. We were able to get rid of price control over a large number of articles without seeing a runaway rise in prices. In fact the Index of Retail Prices has since last June kept remarkably steady. All this has both helped and been helped by that most intangible of all our assets—confidence in our policy and in the £ sterling.

Events during the year had their effect on the financial position of companies. Although experience in different industries varied, trading profits, taken as a whole, were less than in 1951. Yet companies in general did not have to finance rising costs of replacing stocks. Encouraged by our monetary policy—they were able to repay debt, particularly advances made by the banks. The total of bank advances and commercial bills dis-

counted, under the influence of our monetary policy, declined in the financial year as a whole by £254 million.

EXCHEQUER OUT-TURN, 1952–53

I now come to another movement—if I may use a musical simile—of my speech, and this is not, perhaps, quite so gay. The disinflationary developments, however, had less comfortable consequences for the Exchequer than they did for the economy as a whole. I will now give a brief review of the out-turn of revenue and expenditure during the year.

REVENUE

With lower levels of production and imports, total revenue amounted to £4,439 million, or £222 million less than the Budget estimate. Inland Revenue duties produced £2,451 million against an estimate of £2,619 million. All the main heads of duty, except Surtax, were affected by a combination of causes, all operating in the same direction. Profits coming under assessment for 1952–53 showed a smaller increase than had been expected. This was mainly because the recession in the textile and allied trades had a greater effect than expected on companies closing their accounts during the March quarter of 1952. This accounted for part of the deficiency in both Income Tax and Profits Tax. The yield from P.A.Y.E. also fell below the estimate because with lower industrial production earnings did not rise as much as expected. At the same time the increase in the distributed rate of Profits Tax made in 1951 produced less than had been forecast, and there were lower yields from both Stamp Duties and Death Duties.

Customs and Excise Duties produced £1,763 million in 1952–53, compared with the estimate of £1,815 million. Drink and entertainments produced a little less than expected, but most of the shortfall occurred on Purchase Tax and the protective tariff duties under the Import Duties Act, 1932. The drop in receipts from the latter duties was, of course, directly due to our import cuts, the size of which I have already described. At the same time Purchase Tax yielded less, partly because deliberate concessions were made to the textile trades after the representations made by hon. Members during last year's Finance Bill debates.

EXPENDITURE

Now let us look at expenditure. The Committee will recall that having, in the first place, estimated total expenditure at £4,231 million, I then made proposals for the reduction of food subsidies, on the one hand, and increases in social benefits, on the other, the result of which I judged would be to reduce expenditure to £4,151 million. I think it will be more convenient to the Committee if I take this figure as my starting point.

In the event, total expenditure amounted to £4,351 million, an excess of £200 million. Expenditure on Consolidated Fund Services was £667 million, an increase of £42 million on the Budget estimate. The principal reason is, of course, the higher level of interest rates, particularly on our short-term borrowings, which followed the rise in Bank Rate from 2½ to 4 per cent. This is not a negligible addition to our expenditure; but it is a good deal less than the rather more imaginative figures that have been suggested at various times. As the Committee know, or should know, part of it has been, or will be, recovered by the Exchequer in taxation, so the undue gloom of hon. Members need not continue. Moreover, our monetary policy has made an important contribution to the easing of our economic position in the last 12 months. We should not, and I feel we shall not, under-rate the new look which it has given to our affairs.

Expenditure on the defence programme was estimated at £1,377 million, that is a net figure after appropriating in aid £85 million as the sterling counterpart of defence aid from the United States. In the event the net expenditure amounted to £1,404 million, an excess of £27 million. Civil Supply expenditure was estimated at £2,149 million; in fact, the figure was £2,280 million, an excess of £131 million. This is accounted for partly by the postponement of some of the food subsidy changes, and partly by a number of varied items, details of which have already been published. Here I will mention the provision for meeting the Danckwerts Award on doctors' pay. This bequest cost nearly £40 million. Then there was extra expenditure or research and other matters by the Ministry of Supply and additional outlays by the Ministries of Food and Materials on their trading services.

OUT-TURN

So, taking both revenue and expenditure together, we have on the conventional basis an above-the-line surplus for the year of £88 million, compared with a surplus which I estimated in the Budget of £510 million. Of the shortfall of £422 million, a little under half represents higher expenditure and rather over half a lower yield from taxation. The shortfall on the revenue side is, as I have explained, largely a result of the disinflationary developments of the past year. The increase in expenditure did not have the inflationary consequences it might have had if our policy of eliminating the pressure of excess demand had not been so successful in other fields.

I now turn to the position below-the-line. Rather heavier drawings by the Coal Board and the local authorities have been offset to some extent by a reduction in the demands of the Cotton Commission; and the total shortfall of receipts against payments, which I originally estimated at £506 million, has turned out only slightly higher, at £524 million.

Let me now look at the position of the National Debt. In addition to financing the net deficit on the Budget as a whole, the Debt had to accommodate the issue of a further £58 million of Coal Compensation Stock. But it benefited from, among other things, the repayment in April, 1952, of £300 million of capital from the increased sterling holdings of the Exchange Equalisation Account. This sterling holding had risen to an excessive figure as the result of the fall in the gold and dollar reserves in the previous year; and I should warn the Committee that, with the recent rise in the reserves, there may have to be a movement the other way. In all the National Debt rose by £160 million over the year.

The main changes in the composition of the Debt in the course of the year have been as follows. The Floating Debt was increased in the year by about £103 million. We took advantage of favourable markets to carry out a series of successful operations. The result is that over the year we have been able not only to provide for the repayment of maturing debt, but also to replace a certain amount of the Floating Debt with longer-term securities. We paid off on maturity £105 million of Serial Funding Stock, and £150 million of National War Bonds, and made


new issues of £200 million of 1¾ per cent. Serial Funding Stocks, 1953 and 1954, £115 million of 3 per cent. Serial Funding Stock, 1955, and £100 million of 3 per cent. Exchequer Stock, 1960. Repayments of small savings exceeded receipts by £36 million and encashment of Tax Reserve Certificates exceeded purchases by £54 million.

GENERAL FINANCIAL POSITION

These transactions were in part reflected in the financial structure of the banking system. There was an increase in the holdings by the banks of Floating Debt and securities. This more than offset the decline to which I referred earlier in the total of advances and commercial bills discounted. The banks during the year have been faced with the problem of operating a credit policy somewhat more restrictive than those of which they had recent experience. They succeeded well in invigorating, rather than damaging, the industrial organism, and made their contribution towards the general easing which I have already described.

If we stand back and look at the developments of 1952 as a whole, we see clear evidence of the success of our disinflationary policies. The developments of 1952 have vindicated the strategy of the last Budget. Employment has been maintained; inflation has been checked; we have created room to expand exports—[Interruption]—and we have a surplus on the balance of payments. I can only say that I am glad the Committee have caught that point, because they are going to hear more on this problem of exports before I have finished this afternoon. It is a major one.

On the other hand, despite the successful past that I have announced, let us all face frankly the many difficulties, dangers and problems which are still before us: the high level of Government and other public expenditure, large parts of it inevitable, the difficulty in selling more goods abroad, the signs of under-production with short-time working, the need perpetually to watch inflationary tendencies, the absolute need to maintain confidence in sterling. So we can have no permanent satisfaction until or unless we face these anxious problems and overcome them.

Now let us look at the immediate Budgetary prospect.

GOVERNMENT EXPENDITURE IN 1953–54

Total expenditure above-the-line in 1953–54 I estimated at £4,259 million, an increase of £108 million over last year's estimate. The first element in this, an increase of £48 million in the Debt charge and other Consolidated Fund services, represents about the same charge to the Budget as was actually incurred last year.

The second element is defence expenditure. In 1953–54 this will reach the large sum of £1,497 million, an increase of £120 million. This is a net figure after allowing for the sterling counterpart of defence aid already allotted to us by the United States. We have put this at £140 million—£55 million more than last year. The net figure for defence does not include certain expenditure on defence preparations coming under the Civil Votes, which amount to £138 million. As explained in the Defence White Paper, we have made a very thorough review of the defence programme. But for this, defence expenditure in 1953–54 would be running very considerably higher.

Civil supply expenditure—that is, all supply expenditure other than the defence programme—is estimated at £2,089 million, £60 million less than last year. This reduction has been achieved against a background of increased prices, inescapable commitments and the natural development of the major services. I intend to run through the main heads in order to attempt to satisfy hon. Members who perform their classical duty of criticising expenditure. I hope to show that it is by no means an unsatisfactory result, but we must keep up the pressure during the coming year.

The social services take 60 per cent. of civil supply expenditure, the figure being £1,264 million, an increase of about £80 million on last year. There are three main causes for the increase. Twenty-four million pounds is due to there being, in 1953–54, a full year's cost of the increases in social benefits made in the last Budget. The National Health Service, excluding Civil Defence, will cost £411 million. This represents an increase of £18 million due mainly to rising costs, of which the outstanding example was the Danckwerts Award on doctors' remuneration—which was, of course, not included in last year's original estimate.

Education, including the universities, will cost £286 million—£27 million more than last year. This increase is mainly due to the growth in the number of schoolchildren, the increase in teachers' remuneration, and the need to provide new schools to match the re-distribution of the population in new towns and housing estates.

The remainder of the provision for the social services, £567 million, is almost entirely accounted for by National Assistance, £128 million; National Insurance and family allowances, £183 million; war pensions, £89 million; housing grants, £70 million; and Exchequer contributions to local revenues, £68 million.

The provision for food subsidies in 1953–54 is, in round figures, £220 million, which compares with the rate of £250 million which I set in last year's Budget as the objective to be aimed at in a full year. This reduction flows from our policy, which has already been announced, of decontrolling eggs and cereals.

The remaining items under civil expenditure total just over £600 million, about £85 million less than last year. Part of this decrease—about £35 million—is accounted for by savings on activities connected with the defence programme, namely, industrial capacity for defence, strategic stockpiling and Civil Defence. The general expenditure of the Ministry of Supply, mainly on general research and development, increases, however, by £20 million. But a large once-for-all reduction has been secured by the receipts expected from sales of Ministry of Food trading stocks of feedingstuffs and other grains. Here again the Exchequer benefits from cereal decontrol.

There have also been considerable administrative economies. These result from the continued co-operation which I have had from my colleagues in securing staff economies throughout the Government machine. They will be supplemented in the future by such measures of administrative simplification as the amalgamation of Departments recently announced. The Civil Service figures for the close of the financial year are not yet available, but I have every reason to expect that they will show a reduction in the Civil Service since 1st January, 1952, of 22,000.

So much for expenditure in the coming year. But before I leave the subject, I should like to explain to the Committee our attitude to Government expenditure generally. Sometimes, as in the flood disaster—I am sure the Committee will be with me in this—an increase in Government expenditure is well merited. We might also have to incur fresh burdens due to a sudden turn in international affairs. At present some of the straws seem to be blowing towards a relief of tension, but we must not relax. I continually watch our overseas expenditure. At home we have by no means said our last word about reducing Civil Supply expenditure. This process must go on and must play its part in maintaining the health of our economy.

We shall work in the spirit that wherever appropriate the Government should do less and that the private citizen should be in a position to do more. During the course of last year, by following this line we introduced some flexibility and more economy. Thus we must enter a new phase in our housing policy, in which private enterprise must play a progressively bigger part and thus proportionately relieve the Exchequer.

The Health Service problems are so complex and of such wide interest that we have sought the assistance of a Committee, as my right hon. Friend the Minister of Health announced before Easter. I fail to see why it should be called political cowardice for those of us who intend to maintain the Health Service to have it impartially examined in order that those who pay for it, whether political or non-political persons, should get value for money spent.

FOOD AND AGRICULTURE

In the field of food and agriculture this policy brings with it the twin benefits of relief for the Exchequer and increasing freedom—freedom not only for fanners and traders, but also for the housewife. I am glad to be able to announce now a further step in this direction. My right hon. Friend the Minister of Food has just arranged to buy one million tons of surplus Cuban sugar at an advantageous price. We shall be able to use this addition to our other supplies over the next two years. Under the stimulus of the Commonwealth Sugar Agreement, our supplies from the Commonwealth are growing rapidly, and we shall still rely


on their efforts. But this special purchase will give us extra sugar in the immediate future.

Our purpose is to end sugar rationing and the allocation of sugar to food manufacturers, and we shall now be able to do so soon. The details are still being worked out, and I cannot announce the precise date on which rationing will end. It will take a little time to get enough sugar refined and distributed, but as a preliminary step, the ration will be increased by 2 ounces on 17th May.

The cost to the balance of payments of the extra sugar will be partly offset by a substantial fall in our imports of expensive substitutes. After rationing has ended, the present small subsidy on sugar for domestic use will end too—[Interruption.]—but to those who are longing to hear bad news I must say quite openly that it is by no means certain that this will lead to a rise in price. The ending of this particularly irksome piece of rationing will, I know, be a tremendous encouragement to every housewife.

REVENUE IN 1953–54

I now return to the Budgetary prospects for this year. We have, as I said, a total expenditure of £4,259 million, against this I estimate that total revenue on the existing basis of taxation will amount to £4,538 million, an increase of £99 million over the out-turn in 1952–53.

Inland Revenue duties in 1953–54 are expected to yield £2,560 million, an increase of £109 million compared with the out-turn for 1952–53. This increase is chiefly accounted for by the Excess Profits Levy, from which I expect to collect £100 million compared with only £3 million in 1952–53.

The yield of Income Tax is put at £1,905 million, an increase of £169 million over last year. This big increase is primarily due to the changes made in last year's Budget affecting the distribution of the yield as between Profits Tax and Income Tax. Profits Tax, at £215 million, shows a fall of £161 million compared with 1952–53. Taking Income Tax and Profits Tax together, little change is expected. The estimate also allows for a full year's operation of the wage increases granted late in 1952 and for a somewhat higher level of industrial activity in the coming year.

The yield of Surtax in the last two or three years has exceeded expectations mainly because we have been able to check up on arrears. [Interruption.] I am sorry some hon. Members have been affected. This additional squeeze on revenue is now drying up and I expect to receive only £127 million in 1953–54 against £131 million last year.

I estimate the yield of Death Duties to be £160 million and of Stamp Duties to be £52 million compared with £152 million and £50 million respectively in 1952–53.

Revenue from Customs and Excise Duties, on the existing basis of taxation, I put at £1,770 million in 1953–54 compared with £1,763 million last year. The principal items in this total are in order of magnitude or—if I may say so, from my own angle—merit; first, tobacco at £615 million; then beer and alcoholic drinks at £372 million; then Purchase Tax at £305 million; oil at £290 million; Import Duties Act at 70 million; entertainments at £44 million; and betting at £29 million. Against an increase in total tax revenue of £117 million, I expect a reduction in miscellaneous revenue of £18 million—mainly as a result of the tailing off of the disposal of surplus stocks. This produces the net increase of £99 million, which I mentioned earlier, for the year.

ESTIMATED SURPLUS

Taking revenue and expenditure together, we arrive at an estimated above-the-line surplus of £278 million on the conventional basis, which is an increase of £190 million over the surplus actually achieved in 1952–53. For those recondite ones who like the Alternative Classification, I will say that the surplus is £428 million compared with £275 million, an increase of £153 million.

Of the items below-the-line, only two call for particular comment. The first is the payment for war damage, which at £80 million shows an increase of £22 million over last year. This is because the Government have decided to authorise the payment this year of all outstanding claims in respect of war damage to business chattels under Part II of the War Damage Act, 1943. The second is the provision for loans, mainly for housing, to local authorities. At £400 million this is somewhat less than would


have been necessary had we not once more given local authorities freedom to go to the market for their capital needs. Apart from this, the items show no very great difference from last year.

After taking account of expected receipts the net total to be covered either by the above-the-line surplus, or by borrowing, is £549 million.

PROSPECTS AND POLICY IN 1953–54

We have looked at forward expenditure and the budgetary position. Now, if we are to get a clear idea of the line to be taken in the coming year, we must broaden our view to take in the prospects for the whole economy. We want to see how we can take advantage of our improved state to fortify our balance of payments and maintain confidence in sterling.

Our balance of payments objectives, which I will take first, still stand. Our first objective is that the sterling area as a whole should go on being in surplus—or at least in balance—with the rest of the world. Our objective in the United Kingdom must continue to be that we earn enough not only to cover the cost of our imports and other current overseas expenditure, but also to meet our capital commitments as they arise.

HOME CONDITIONS

Let us look first at the likely trends of home demand. These are discussed in the Economic Survey—which was deliberately published before the Budget—and I shall therefore deal with them only briefly now. Heaven forbid that I should go all through this document with the Committee at this stage. My review of Government expenditure shows that the claims of the Government will be higher this year than last, because of higher expenditure on defence. Small increases in fixed investment and personal consumption are also likely. Investment in stocks is more uncertain. After last year's experience, and with the other increases I have just mentioned, there will probably be some increase in stocks during 1953. This does not need to be large, and we shall continue to use the monetary weapon to assist in keeping this form of demand within reasonable bounds.

OVERSEAS CONDITIONS

Now I turn to exports. Here, it will be said, we face a buyers' market and other difficulties overseas. To that the answer is that in a competitive world Britain must be competitive; we must keep our prices down. We have had nothing to complain of recently about the cost of imported raw materials; so we must look to our costs at home.

The biggest factor in home costs is wages and other incomes. Both sides of industry have a responsibility here which I know they accept, but the issue is too important to be lightly passed over. We still need the continued co-operation of all concerned to see that higher wages and higher profit margins do not push up costs and price us out of our export markets.

But some of these markets are difficult, not because of our prices, but because other Governments have felt it necessary to impose restrictions and other obstacles to trade. We understand the reasons for much of this; indeed, we had to take action of this kind ourselves. To break out from these restrictions needs a great international effort. That is why the Commonwealth Economic Conference laid so much stress on a practical and international approach to freer trade and currencies. That is why Her Majesty's Ministers have put so much time and labour and drive into our external commercial and financial policy

To this end the Foreign Secretary and I opened discussions with the United States Administration and with O.E.E.C. last month, and at the meeting of O.E.E.C. we announced measures to liberalise a further portion of our trade with Europe. I am sure the whole Committee will be thinking of my right hon. Friend in his illness and will wish him a speedy return to our midst. Our drive will continue to be directed towards the freeing of trade as far as possible from restrictions, and when circumstances are right attaining the convertibility of sterling. But there are clearly difficulties in the way of attaining all our aims quickly. An international effort on this scale must take time to mature. In the United States the new Administration is setting about the problem, but they must have time.

We shall get results, but meanwhile we must make the best use of the situation as we find it, and be ready to meet any


further changes in the world climate. The international barometer to-day still stands at "changeable weather"; we may hope to see it climb to "fair" but if it drops to "stormy"—a possibility which we must have in mind—we must be ready.

PROSPECT FOR OUTPUT

With this in mind we can continue our analysis of our economic prospects in the year ahead. Looking at the claims on our resources of the balance of payments, and bringing in the claims of the home market I have already mentioned, my estimate—and the best I can give the Committee—is that we are unlikely to do much more than make good the decline in output of last year. We must not be content with this. We can, and we must, do much better. The physical resources are there—the manpower, and sufficient supplies of most raw materials. In particular, steel, about which we were anxious a year ago, is now more plentiful, and the prospects are that, except for a few types such as steel plate, there will be enough to meet all requirements, for home and export, in 1953.

We also have the productive capacity. Latterly our productive capacity has been increasing steadily; and with continuing investment it will go on increasing and is capable of giving us a much greater increase in output, in 1953, provided we take the right course now. We must look beyond the immediate export difficulties and, whatever happens, plan ahead to improve our competitive position. The time and opportunities we now have must be used to re-equip and modernise our factories, to expand capacity in lines which command a ready market abroad, and to develop new lines and new techniques.

This means more investment in productive industry and agriculture. We are making the licensing procedure easier and quicker for the building of new factories or extensions of factories. No manufacturer should now find difficulty or delay in getting a licence for productive work. The need is, however, so great and so urgent that I have come to the conclusion that further help must be given in this Budget.

INITIAL ALLOWANCES

I have in mind now the method first introduced in 1945 by a distinguished

predecessor, who was then Sir John Anderson. I propose to reinstate the system of initial allowances for capital expenditure on plant and machinery, on the construction of industrial buildings and on mining works. These initial allowances will operate for Profits Tax as well as Income Tax. The rate for plant and machinery will be 20 per cent. in respect of capital expenditure incurred after today. Besides helping industry this will of course be available for agricultural machinery and will push forward the drive for more food production at home. Twenty per cent. was the rate originally granted in 1945 and it seems to me adequate now. For capital expenditure on the construction of industrial buildings, the rate will be 10 per cent.; it never went beyond that.

There is something further I want to say about these allowances. In view of the great importance to our national economy of extractive industries and especially of new mining development, and the unique character of some of the expenditure, I propose that the rate of initial allowance for capital expenditure, both at home and overseas, on new mining works—a term that includes such things as pit shafts and oil wells, but not plant and machinery—shall be at 40 per cent. instead of the 10 per cent. that was formerly granted. These proposals will cost the Exchequer nothing this year, but for 1954–55 the cost is estimated at £50 million and thereafter at £84 million in a full year. They should go a long way in assisting industry in the re-equipment, modernisation and expansion that is necessary, and will produce an increased demand for investment this year.

BUDGET POLICY

The question we now have to consider is: can we, and should we, stop at this? Will this change alone give our industries sufficient stimulus to get production rising, and rising fast enough to overtake the decline of last year and go on to the new high levels we need? All the evidence suggests that we must do more. Even with the steps we have taken, we are not likely to bring out the full production of which we are capable. In fact, if we do no more, there is a real danger of a lull, a sort of ebb tide in the economy. We must get out of the slack water, lighten the ship and give her way. In other words, if we want


vision, enterprise and an expanding future, we must, if we can, throw off some of our burdens.

No one would deny that the burden of taxation today is too heavy, both on industry and on individuals, and that it drags down initiative and enterprise. But the question remains, can we afford to do something this year? This is the heart of this Budget. In recent years high taxation has been used as the instrument for warding off inflation. And what a blunt instrument it is! Even the highest level of taxation that was politically possible—and a far higher level than was desirable—was barely sufficient. It was continually necessary to pile up surpluses to make up the chronic deficiency in private savings—and yet much desirable investment had to be held back.

Now the position is quite different. In my review of this last year, I showed how the restraint of demand, working with the tide of economic forces, and reinforced by our new monetary weapon, transformed the situation. So far from demand pressing too hard upon output, demand was restrained, while productive capacity increased. As the National Income White Paper clearly shows, the nation's savings were sufficient, even with the reduced Budget surplus, to finance all the investment undertaken at home, and at the same time to allow the substantial improvement in our balance of payments.

I shall not weary the Committee with the figures, but they will be found in Table 6 of the National Income White Paper, which, read with the Economic Survey, more than confirms what I have said, as does some public comment. This year my economic analysis has shown that the likely level of effective demand will still be less than our productive capacity, so that again we shall not require savings through the Budget of anything like the size of previous years.

The final question is the amount of the surplus required. This cannot be determined by exact calculation. The way we have to take is clear; how far it would be wise to go, when so many of the factors are imponderable, must be a matter of judgment. I have to bear in mind the lull in production and the paramount need for more exports. I have to remember our present export difficulties and I am impressed by the need to use the

opportunity we have now to improve our competitive power. I must try to avoid increasing living costs by this Budget. Yet we must not allow inflation to return. Here I can take account of the fact that the Budget will not be operating alone, but in combination with monetary policy. I offer no forecast of the way in which the monetary weapon may be used; for its great virtue is its flexibility. But it appears to me that conditions in 1953 as we now see them will require broadly a continuation of the monetary measures in operation now.

After weighing all the factors, my judgment is that we should retain an above-the-line surplus of rather more than was realised last year. This is the most careful estimate that I can make and it approximates to some that have been published. The first conclusion I have drawn from this is that I shall propose no new taxes at all. For the first time since the war—and high time it is—we take a step in a new direction. The reliefs which I shall propose are designed to improve our competitive efficiency, to provide incentives for greater effort and to encourage private saving.

PURCHASE TAX

So I turn first to Purchase Tax. With the return of more normal conditions the burden of Purchase Tax at very high rates now presses almost unbearably on trade and on the community as a whole. I have also to think in this connection of the buoyancy of the revenue in the longer term and of the stability of the tax. Looking at the tax from these points of view, I have come to the conclusion that, while there are a few points which require particular treatment, the fact of the matter is that the present rates are too high, and the margins between rates too wide. The difficulties are most apparent in the case of goods chargeable at the higher rates, where in some cases the tax has proved heavier than the industries concerned can bear, and a danger of redundancy of labour has shown itself. All this is doing damage to home trade, to skill, craftsmanship and tradition and, above all, is reacting adversely on our all important export trade.

Last year I was able to introduce some easement in the classes associated with Utility schemes and now covered by the


D Scheme. This year I turn to the rest of the field, and I have decided on an all-round reduction of the rates—in fact, one quarter off each of the rates in this general field—which will also have the effect of reducing the margins between them. A reduction of the 100 per cent. rate to 75 per cent. will give some help to the jewellery and silverware trades, where traditional skills must be fostered if they are not to die. I would say in passing that the fact that cosmetics happen to be in this group and will come down was not designed as a method of wooing the electorate.

Bringing the 66⅔ per cent. rate to 50 per cent. will affect the group of articles, including motor cars, radio and television sets, refrigerators, vacuum cleaners and washing machines, on which the tax was increased in 1951. In present circumstances there is not the same pressure on the resources of the industries concerned and to keep the tax at the same high level as before is not necessary. The 33⅓ per cent. rate comes down to 25 per cent. Many items in daily household use—carpets, linoleum, hardware, cutlery, bicycles and so on, will be affected. I do not suppose that even this reduction will make Purchase Tax popular, but it will do much to ease trade and household purchases. Hon. Members will be aware that to go further would cause undue strain upon the position of distributors carrying taxed stocks, and would be inconsistent with our acceptance of the recommendations of the Committee over which Sir Maurice Hutton presided.

There are, however, a few classes of goods where exceptional treatment is necessary. Let me take the Committee round the shop window. I propose to exempt from tax batteries for wireless sets. These are required by people living in areas with no mains supply of electricity, especially in the rural areas. The common and trusty umbrella comes down from 66⅔ per cent. to 25 per cent. Pianos benefited from relief last autumn, but I believe that nothing short of complete exemption will enable this craft industry to survive and so continue to make its useful contribution to our export trade.

Certain fancy goods, as the White Paper shows, will no longer be liable to a specially high rate. Light three-

wheeled motor cars come down to 25 per cent. and will be treated the same as motor-cycle combinations. I hope to come to the rescue of electric goods vehicles by exempting them from the 33⅓ per cent. tax on their chassis and so putting them on the same footing as the pedestrian-controlled type.

For safety's sake I propose to reduce from £1 5s. to 10s. the additional motor duty on light motor-cycles up to 250 c.c. with sidecars.

Now, taxicabs. The position of the London taxi service was strongly pressed by my hon. Friend the Member for St. Marylebone (Sir W. Wakefield) and others last year. It has recently been examined by a Committee under the chairmanship of Lord Runciman. Their valuable Report, which was published last week, has been carefully examined by the Government. The Committee considered very closely the proposal put forward for relief from petrol duty in favour of the taxi owners; but for the reasons shown in their Report they found themselves unable to support such a proposal. The Government agree with the Committee that there are conclusive objections to such a course, but we accept their recommendations that taxicabs of a type approved by the Commissioner of Police in London shall be exempt from Purchase Tax and that they shall also be freed from all hire-purchase restrictions.

All these Purchase Tax changes will operate from tomorrow, and as new supplies begin to reach the shops, they should lead to a useful reduction in prices. The cost will be £45 million this year and £60 million in a full year.

Before leaving the Purchase Tax, I want to refer to the wording of the general Resolution relating to amendment of the law with regard to the public revenue. This resolution permits of amendments to the law relating to Purchase Tax as a whole and also amendments reducing any of the rates of tax generally for all goods to which the rate applies. It does preclude amendments altering the rates of tax on particular items in the Purchase Tax schedule. I hope this arrangement will commend itself to the Committee as sensible and as according with the practice of the last few years in avoiding "Dutch auction" proceedings.

ENTERTAINMENTS DUTY

Now for Entertainments Duty. I am satisfied that last year's new arrangements are on the right lines and should be continued, but I have some proposals in fulfilment of the undertakings I then gave. I have now found a way of helping amateur sport in general. I shall proceed by reference, not to the status of individuals, but to the purposes of the clubs or other organisations for which they play. On this basis I propose to exempt amateur sport from Entertainments Duty. The exemption will apply to games, races and other sports provided by a club or similar organisation established and conducted for the promotion and furtherance of amateur sport and not conducted or established for profit. It will, of course, be a condition that no remuneration should be paid to anyone actually taking part.

In most sports the amateur definition which I have devised will, I think, work reasonably well, but it will not do for cricket. In this country cricket occupies a special place among sports, not only as forming part of the English tradition but as a common interest helping to bind together the various countries of the Commonwealth. With all this in mind and as the total receipts of Entertainments Duty from cricket are so small, I propose to exempt it from the duty altogether.

I propose at the same time to amend the conditions governing the exemption of amateur dramatic and operatic entertainments, so that exemption will no longer be debarred by reason of the payment of an instructor, producer or manager. A simplification is also being made in the rules for calculating duty on season tickets and similar lump-sum payments for admission to a series of football matches or other entertainments.

These concessions of Entertainments Duty cost very little—about £220,000—and will take effect from 27th April next.

MINOR IMPROVEMENTS

Leaving the playing field and the amateur stage, I must take the Committee through a short series of improvements in our taxation system for which I am providing in the Finance Bill. Details will be published in the Bill, so I can be brief now. On the Customs side there are only two—a small change in

the Customs Duty on imported mechanical lighter parts, and the renewal of the Customs Duty of £4 a cwt. on hops for a further period of four years.

On the Inland Revenue side, I have again been digging in that mine of useful suggestions, the report of the first Tucker Committee, and have put into the Bill provisions relating to partnerships, to the carrying forward of trading losses for one year for set-off against other income, and to the treatment of payments made by companies towards meeting trading losses of associated companies.

I have also looked at the Interim Report on the taxation of overseas profits, which Lord Radcliffe and his colleagues on the Royal Commission were good enough to produce at my request. I am acting at once on two of their three particular recommendations; first on profits which are blocked overseas, and secondly on unilateral relief for double taxation, which will cost £2¾ million in 1953–54 and £3 million in a full year.

Next, I am making special provision so that transactions designed to put the capital structure of the iron and steel companies in a suitable state for the marketing of their shares may be carried out without attracting an artificial burden of Profits Tax.

There are, alas, two small loopholes I must close. Owing to defective machinery of assessment, residents in the Scilly Isles have enjoyed exemption from tax on income and profits arising there. A Clause in the Finance Bill will bring this happy state of affairs to an end. The Bill will also include a provision to nullify a device whereby certain income arising abroad is applied abroad in repayment of loans enjoyed in the United Kingdom and so escapes the normal charge of United Kingdom tax.

I am also giving a small Stamp Duty exemption for documents used by National Savings Groups, and relief will be given from the full rate of Conveyance Stamp Duty in respect of transfers of certain stocks to be issued by local authorities. This should help those local authorities who wish to borrow on the market.

I also propose to give farmers, who feel the heavy weight of the taxation of compensation received for the compulsory slaughter of animals because of foot-and-mouth disease, a fresh opportunity


to elect for the so-called herd basis for tax purposes. This will apply to farmers who have suffered the slaughter of a substantial part of a herd in the last year or two.

I am sorry to trouble the Committee with these points, but as they come in Resolutions I think it would be wrong not to mention them.

We can now leave the realm of administration and come to some matters of more human interest. Since 1925 there has been a special relief for those who have become 65—or, if they are married men, whose wives have reached this age. The arrangement at present is that, if the income is no more than £500, a deduction corresponding to that given for earned income—at present 2/9ths—is allowed on any investment income that is included. The primary object of this relief was to put the relatively small incomes of those who had saved and invested for old age in the same position as the incomes of those who had earned pensions of like amount. The income limit of £500 has remained unchanged since 1925; I now propose to increase it to £600. I hope that this step, which will cost £1 million in 1953–54 and £2½ million in a full year, will bring some relief to certain older deserving sections of the community.

I also propose an increase to £60 in the allowance for dependent relatives, who are incapacitated by old age or infirmity. This allowance has remained unchanged at £50 since 1943–44 although the married, single and children's allowances were improved last year. The housekeeper allowance will go from £50 to £60 at the same time. These proposals will be in line with one of our most cherished traditions: they help those who maintain family unity by caring for the old and keeping a home together for the young. The cost will be £3½ million this year and £4¼ million in a full year.

It has been said that every Chancellor has a particular favourite. I now come to mine. Authors who spend more than a year on a work—and authors frequently do—are at present entitled to a special spreading arrangement for tax purposes where they sell an interest in the copyright of their work for a lump sum payment. I now propose to extend this relief to the more normal case by allowing the

royalties of the first two years after publication to be spread in the same way as lump sums. In the case of authors I am extending a concession already made, which will cost very little indeed. Others who may wish to spread out their earnings will realise that their case is being considered in broader terms by the Royal Commission.

I also propose to insert a Clause in the Finance Bill taking power to accept, in payment of Estate Duty, chattels normally kept in houses in which Her Majesty's Government have an interest; or in houses which have themselves been accepted in payment of Death Duties and passed on to the National Trust or other bodies. The "chattels" so simply described are, some of them, historic treasures, which the nation cannot afford to lose sight of; like land and houses, they will be paid for out of the National Land Fund.

EXCESS PROFITS LEVY

I revert to this year's main theme—the need to give a real boost to production. Let us launch a drive to show the world that our highly concentrated industry and our developing agriculture are taking on a new lease of competitive power, life and hope. Already I have announced the re-introduction of the initial allowances. Now for bigger matters.

It is clear that we should, in a great industrial society, look ahead for a period longer than one year. We must be in deadly earnest in this struggle for overseas markets; we must go into it as lightly burdened and as nimbly competitive as we can. Last year we balanced our payments. This year we can continue to make way only if we succeed in giving a real fillip to our production. A work of art must have a theme: a Budget must hold out a prospect.

Each time that I have discussed with the leaders of industry how best to help developing companies and exporters, they have said, "You must relieve the general burden of taxation which falls upon us. Artificial devices are of little value." Schemes of export subsidies are generally rejected as unfair. I have asked those who speak for industry and commerce whether our banking and financial system provides adequate finance for our exporters. On the whole, I believe that it does, and that if there is a problem here it is rather one of making more


widely known the financial facilities that already exist.

I must honestly say after going into this in the spirit in which I opened my speech with an intense desire to help export and development—that I found that everyone, including the T.U.C., comes back to the incidence of the Excess Profits Levy on export and development. I explained last year that this levy had to be introduced as a purely temporary measure to deal with the exceptional circumstances of a period of re-armament. I do not propose any changes in the levy as it now exists, and as long as it exists, except to redeem the promises made about minerals and investment holding companies.

When we proposed a tax on excess profits it was on the basis that the rearmament programme was to be at a high rate for a relatively short period—about three years—at the end of which emergency period it would tail off. Now we must expect re-armament to go on at not quite so high a rate for a long time. This change in the impact of defence diminishes the justification for a continuing Excess Profits Levy. Taking into account this change, and the effect of the levy on exporting and developing businesses, I have reviewed the period for which it must go on.

Now be it noted that we shall get £100 million from this tax in the coming year and rather more than £100 million in the year after, that is, in 1954–55. Before the next Budget, and with still a year of yield from the levy—that is, in 1954–55—it should be possible to make a full review of the level of taxation and of industrial taxation in particular in the light of the Royal Commission's Report. So, after much thought, I have come to the conclusion that the levy should be ended with effect from 1st January, 1954.

I am sure that it will be an encouragement to industry to know that a definite term has been fixed for the operation of this emergency tax. Following the precedent set in 1946 for the ending of the war-time Excess Profits Tax as from the end of that year, the terminating legislation will be included in this year's Finance Bill.

INCOME TAX

With initial allowances restored and a term set to E.P.L., British producers will

have a chance to plan ahead. But my diagnosis shows that long-term prospects are not enough—an immediate quickener is indicated. I have already referred to the numbing effect of excessive direct taxation. We must banish the hopeless feeling that extra effort is not worth while. I have looked for a method which will relieve corporate industry and which will not forget the vital human element. I have not lacked advice. The machines may be happier for their allowances, and the calculators for the ultimate demise of E.P.L. but we must look at industry as an organic structure of men and women. So I have examined the classical method—a reduction of the standard rate of Income Tax.

I find that more than half the benefit of such a reduction would go to corporate industry and the rest to individuals in every walk of life, in trade, agriculture or the professions. I therefore propose that the standard rate of Income Tax should be reduced by 6d.—from 9s. 6d. to 9s. in the £. This of itself will cost £64 million in 1953–54 and £73 million in a full year. At current levels of profits and distributions—and this is why I am impressed by its value for industry—the reduction of 6d. would represent £45 million relief on the undistributed profits of companies—a very potent augmentation of the company reserves available for maintenance, innovation, and development, upon which, I trust, it should be spent.

I have not forgotten the smaller incomes, and with this proposed reduction of 6d. in the standard rate of Income Tax I link proposals to reduce each of the reduced rates by 6d. At present the first £100 of taxable income is charged at 3s. in the £; the next £150 at 5s. 6d. and the next £150 at 7s. 6d. These rates, for the same bands of taxable income, will become 2s. 6d., 5s. and 7s. respectively. Thus the benefit of the reduction in the standard rate will be carried down, without restriction, to the lowest incomes that are liable to Income Tax. The cost of this concession in reduced rates will be £53 million in 1953–54 and £61 million in a full year.

GENERAL CONCLUSION

I can now sum up my proposals in this incentive Budget. It has been designed to give to our production the extra help which our financial resources


permit. This help takes four main forms—the restoration of the initial allowances for plant and machinery, a lessening of the load of Purchase Tax, a prospect of the future ending of E.P.L., and the reduction of the standard and reduced rates of Income Tax. These steps are all designed to encourage industry both as a corporate whole and as a living structure of human beings. Only by increasing our national wealth can we continue in our proud position of leader and banker of the sterling area. Only thus can we regain our economic independence. Last year we reintroduced the monetary weapon.

Now on taxation this Budget moves for the first time for many years in a new direction. It does so because the economic circumstances show this to be the right course. The path of restriction has been so firmly fixed in people's minds that it now tends to be regarded as the inevitable line of conduct. But we can now look to a more hopeful way. We can lighten our load and liberate our energies. The fact that we have not been getting the best out of our productive capacity springs in part from our terrible burden of taxation, which is about the highest in the world. Even after this Budget we shall not have "let up" to a level which can be called even moderate. All reliefs are carefully designed for the prime purpose of giving the incentive for greater production.

I will give the final figures. This year the reductions in Purchase Tax and other Customs and Excise Duties will cost £45 million. The minor easements will cost £7 million. The reduction of Income Tax will cost £117 million. This makes a total reduction in taxation this year of £169 million. I told the Committee that the prospective surplus was £278 million. As a result I shall carry forward a surplus above-the-line of about £109 million, some £20 million more than the surplus above-the-line realised last year. This is, I believe, about the right amount, taking into account the wider economic and financial issues which I have discussed. Next year the cost will be £259 million.

The success of the policy I advocate will depend on the extent to which industry and the public respond to the call. I have confidence in the response of our people. So in this spirit we take

a new direction. We step out from the confines of restriction, to the almost forgotten but beckoning prospects of freer endeavour and greater reward for effort.

CUSTOMS AND EXCISE

1. Hops, etc. and beer (Customs)

Motion made,
That the period for which the following duties of customs are chargeable (which expires on the fifteenth day of August, nineteen hundred and fifty-three) shall be extended by four years, namely:—

(a) the duties now chargeable by virtue of subsection (1) of section three of the Finance Act, 1949, on hops, hop oil and extracts, essences or other similar preparations made from hops; and
(b) the additional duty now chargeable in respect of beer by virtue of that subsection.—[Mr. Butler.]

The CHAIRMAN put the Question thereupon forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions).

Question agreed to.

The CHAIRMAN then proceeded successively to put forthwith the Question on each further Motion made by a Minister of the Crown, save the last Motion.

2. Mechanical lighters (Customs)

Resolved,
That, as from the first day of May, nineteen hundred and fifty-three:—

(a) subject to the provisions of this Resolution, the duty of customs charged under section six of the Finance Act, 1928, shall cease to be charged on component parts of mechanical lighters, but shall be charged on mechanical lighters imported incomplete as well as complete;
(b) section two hundred and twenty-two of the Customs and Excise Act, 1952 (which provides for treating as incomplete mechanical lighters for the purposes of excise duty prescribed components of such lighters and assemblies including such components) shall apply for the purposes of the duty of customs charged as aforesaid as it applies for the purposes of excise duty;
(c) for the purposes of the said section two hundred and twenty-two as applied as aforesaid, the prescribed component of a mechanical lighter, other than a lighter appearing to the Commissioners of Customs and Excise to be constructed solely for the purpose of igniting gas for domestic use, shall, until otherwise provided by an order under subsection (2) of that section, be the body; and
(d) so much of subsection (1) of section two hundred and twenty-one of the Customs


and Excise Act, 1952 (which enables the said Commissioners to make regulations for the purpose of regulating the manufacture of mechanical lighters) as relates to imported wheels for striking a flint shall cease to have effect, and any regulations in force under that subsection on the said first day of May shall have effect accordingly; but no duty of customs shall be charged on such wheels delivered without payment of duty by virtue of those regulations before that day and accounted for to the satisfaction of the said Commissioners.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

3. Entertainments duty (amateur sports and entertainments)

Resolved,
That—

(a) entertainments duty shall not be charged on payments for admission to an entertainment held after the twenty-sixth day of April, nineteen hundred and fifty-three which consists solely of games, races or other sports, being an entertainment to which, apart from this provision, the second scale of duty would be applicable, where the Commissioners of Customs and Excise are satisfied—

(i) that the entertainment is provided by a society, institution or committee established and conducted for the promotion and furtherance of amateur games or sports and not conducted or established for profit; and
(ii) that no payment is made or reward given for the participation of any person in any game, race or other sport constituting the entertainment or part of the entertainment, other than prizes of a reasonable number and value competed for and won by individuals taking part therein;
(b) for the purposes of section ten of the Finance Act, 1949 (which exempts certain amateur theatrical and other entertainments from duty) an entertainment held after the date aforesaid shall not be deemed not to be an amateur entertainment by reason only that any payment is made or reward given for the services of any person as instructor, producer, manager, or in any advisory capacity
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

4. Entertainments duty (cricket matches)

Resolved,
That cricket matches played after the twenty-sixth day of April, nineteen hundred and fifty-three shall be excluded from the entertainments in respect of which entertainments duty is payable, and references in the

enactments relating to that duty to an entertainment shall be construed accordingly.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

5. Entertainments duty (lump sum payments)

Resolved,
That the following provisions shall have effect with respect to payments for admission to entertainments all of which are held after the twenty-sixth day of April, nineteen hundred and fifty-three, that is to say:—

(a) where payment for admission to two or more such entertainments is made by means of a lump sum within the meaning of subsection (4) of section one of the Finance (New Duties) Act, 1916, and the Commissioners of Customs and Excise are satisfied—

(i) that the lump sum constitutes full payment for admission to each of the entertainments in respect of which it is paid; and
(ii) that all of those entertainments arc to take place within a period of one year,
the amount of the duty to be charged under the said section one in respect of that sum shall be an amount equal to the aggregate of the amounts (if any) which would be charged by way of duty if separate payments were made for admission to each of those entertainments, being payments of such amounts as appear to the said Commissioners to be proportionate respectively to the values of the rights of admission to those entertainments, and of which the aggregate is equal to the said lump sum;
(b) where payment for admission to two or more such entertainments is made by means of a single payment representing the aggregate of separate prices of admission to those entertainments respectively, and not being a lump sum within the meaning of the said subsection (4), and the said Commissioners are of opinion that the said prices of admission as taken for the purpose of arriving at the single payment are not substantially proportionate to the respective values of the rights of admission to the entertainments to which they relate, they may direct that the amount of the duty to be charged under the said section one in respect of the said payment shall be ascertained in accordance with the provisions of the foregoing paragraph as if that payment were a payment to which that paragraph applies, and those provisions shall have effect accordingly; and
(c) section three of the Finance Act, 1944 (which relates to the amount of entertainments duty chargeable on a lump sum payment) shall cease to have effect.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

PURCHASE TAX

6. Purchase tax (general reduction of rates of tax)

Resolved,
That, as from the fifteenth day of April, nineteen hundred and fifty-three, the first, second and third rates of tax chargeable under the enactments relating to purchase tax shall respectively be twenty-five per cent., fifty per cent., and seventy-five per cent. of the wholesale value of the goods instead of one-third, two-thirds, and one hundred per cent. of that value.

7. Purchase tax (reliefs in respect of particular classes of goods)

Resolved,
That (subject to the power of the Treasury to make Orders under section twenty-one of the Finance Act, 1948, or under the Fifth Schedule to the Finance Act, 1950) the enactments relating to purchase tax shall be amended as follows with effect from the fifteenth day of April, nineteen hundred and fifty-three:—

(a) wireless batteries and accumulators comprised in Group 18 (b) shall be exempt;
(b) keyboard musical instruments comprised in Group 19 (a) (iv) and parts thereof and accessories thereto shall be exempt;
(c) umbrellas and sunshades comprised in Group 21 (a) shall be chargeable at the first rate instead of the second;
(d) fancy or ornamental articles comprised in Group 29 (a) shall—

(i) if not comprised in any other Group, be chargeable at the second rate;
(ii) if comprised in any other Group, be chargeable at the rate (if any) applicable under that other Group,
instead of the third;
(e) mechanically propelled tricycles comprised in Group 35 (b) (i), being vehicles of not more than 8 cwt. unladen weight, shall be chargeable at the first rate instead of the second;
(f) the vehicles exempt under Group 35 (c) shall include vehicles of a type approved by the Commissioner of Police of the Metropolis as conforming to the conditions of fitness for the time being laid down by him for the purpose of the London Cab Order, 1934; and
(g) tax shall not be chargeable under Group 35 (d) by virtue of section eighteen of the Finance Act, 1950, in respect of the chassis of goods vehicles which are electrically propelled.

INCOME TAX

8. Income tax (charge and rates for 1953–54)

Resolved,
That—

(a) income tax for the year 1953–54 shall be charged at the standard rate of nine shillings in the pound, and, in the case of an individual whose total income exceeds

two thousand pounds, shall be charged in respect of the excess at rates in the pound which respectively exceed the standard rate by the amounts by which the higher rates for the year 1951–52 exceeded the standard rate for that year;
(b) section two hundred and twenty of the Income Tax Act, 1952, as amended, shall be further amended by substituting for the references to thirteen, eight and four nineteenths references to thirteen, eight and four eighteenths.
Any change in the rates of tax for the year 1953–54 as compared with the previous year shall not affect the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay-as-you-earn) of the Income Tax Act, 1952, before the eighth day of June, nineteen hundred and fifty-three, but this shall not prevent the resulting over-deductions and under-repayments from being adjusted subsequently by means of diminished deductions or increased repayments under that section, or, if need be, by an assessment.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

9. Income tax (surtax rates for 1952–53)

Resolved,
That income tax for the year 1952–53 shall be charged, in the case of an individual whose total income exceeded two thousand pounds, at the same higher rates in respect of the excess as were charged for the year 1951–52.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

10. Income tax (personal reliefs)

Resolved,
That Part VIII (Personal Reliefs) of the Income Tax Act, 1952, shall be amended as follows:—

(a) in subsections (2) and (3) of section two hundred and eleven (old age relief) for the references to five hundred pounds (which refer to the income limit for the full relief under subsection (2)) there shall be substituted references to six hundred pounds;
(b) in sections two hundred and fourteen, two hundred and fifteen, two hundred and sixteen and two hundred and eighteen (reliefs for housekeepers, dependent relatives and others) for the references to fifty pounds, except the reference in subsection (4) of section two hundred and sixteen (where it does not relate to the amount of the relief), there shall be substituted references to sixty pounds, and for the reference in subsection (1) of section two hundred and sixteen, as amended, to one hundred and thirty-five pounds (which refers to the income limit of the dependent relative) there shall be substituted a reference to one hundred and forty-five pounds:


Provided that the changes effected by this resolution shall not affect the amounts of tax deductible or repayable under section one hundred and fifty-seven (pay-as-you-earn) of the Income Tax Act, 1952, before the eighth day of June, nineteen hundred and fifty-three, but this shall not prevent the resulting over-deductions and under-repayments from being adjusted subsequently by means of diminished deductions or increased repayments under that section, or, if need be, by an assessment.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

11. Income tax (partnerships)

Resolved,
That new provision shall be made as to the amount of tax chargeable, and the persons on whom it is to be charged, where there is a change in the persons carrying on a trade, profession or vocation, or in the manner in which partners share partnership profits.

12. Income tax (adjustment of general income by reference to business loss)

Resolved,
That provision shall be made as to the circumstances in which, in giving relief in respect of a business loss against tax on general income under section three hundred and forty-one of the Income Tax Act, 1952, the loss is to be set off primarily against earned, or primarily against unearned, income, and that, where the person sustaining the loss has a wife or husband, the relief shall be given against that person's own income in preference to the wife or husband's or (at the claimant's option) against that person's own income only and not against the wife or husband's.

13. Income tax (payments between associated companies in respect of losses)

Resolved,
That payments made by a company to an associated company in respect of losses sustained by it shall be chargeable to income tax (including tax for a past year of assessment) as a receipt of the payee company, and to the extent they are so chargeable shall be allowed as a deduction for income tax purposes to the other.

14. Income tax (extension of capital allowances, etc., for industrial buildings and structures)

Resolved,
That it is expedient to authorise all such charges to income tax as may arise from treating as industrial buildings or structures for the purposes of Chapter I of Part X of the Income Tax Act, 1952, buildings or structures used in connection with the fishing industry or in connection with husbandry or forestry outside the United Kingdom.

15. Income tax (overseas profits not remittable to the United Kingdom)

Resolved,
That it is expedient to authorise all such charges to income tax as may arise from any provision as to the treatment for taxation purposes of overseas profits or income not freely remittable to the United Kingdom (including profits or income chargeable to income tax for the year 1952–53 or to the profits tax or the excess profits levy for a past chargeable accounting period).

16. Income tax (abolition of limit on unilateral relief for double taxation)

Resolved,
That it is expedient to authorise all such charges to income tax (including charges for past years of assessment) as may arise from the repeal of proviso (a) to subsection (2) of section three hundred and forty-eight of the Income Tax Act, 1952, or of paragraph 2 of Part II of the Seventeenth Schedule to that Act, or from the repeal applying to past profits for purposes of the profits tax or the excess profits levy where it applies to them for the purposes of income tax.

17. Income tax (postponement of capital allowances to secure double taxation relief)

Resolved,
That it is expedient to authorise all such charges to income tax as may result from any provision enabling a person claiming double taxation relief in respect of income tax, the profits tax or the excess profits levy to postpone the whole or part of any capital allowances.

18. Income tax (charge on overseas income applied in repayment of advances)

Resolved,
That income tax shall be charged on income arising from securities or possessions out of the United Kingdom which is applied out of the United Kingdom directly or indirectly in or towards the satisfaction, or so that the money or property representing it is available for the satisfaction, of a debt for money lent in the United Kingdom or interest thereon, or of a debt for money lent outside the United Kingdom if the money is (whether before or after the income is so applied) received in or brought to the United Kingdom.

19. Income tax (relief for copyright royalties, etc.)

Resolved,
That it is expedient to authorise all such charges to income tax (including charges for past years of assessment) as may arise from extending the treatment under section four hundred and seventy-one of the Income Tax Act, 1952, of certain lump sum payments in respect of copyright, with or without modifications, to payments of or on account of royalties or sums payable periodically.

20. Income tax (election for herd basis on compulsory slaughter of farm animals)

Resolved,
That it is expedient to authorise all such charges to income tax as may arise from enabling elections for the herd basis under the Twentieth Schedule to the Income Tax Act, 1952, to be made in relation to herds of any class on the compulsory slaughter of animals belonging to a herd of that class, including elections affecting years of assessment before 1953–54 but not (except as to relief for losses) years before 1951–52.

21. Income tax (allowances for expenditure on repair of buildings)

Resolved,
That the provisions of the Income Tax Acts relating to allowances and charges in respect of capital expenditure shall be amended (with retrospective effect) with respect to expenditure on repairs to buildings and structures, and in particular shall be so amended that relief from income tax shall not be allowed, or be deemed ever to have been allowable, in respect of the same expenditure both by way of the repairs allowance under Schedule A and by way of the capital allowances in respect of industrial buildings or structures.

22. Income tax (post-war refunds of excess profits tax)

Resolved,
That sections forty-three to forty-five of the Finance (No. 2) Act, 1945 (which provide for charging income tax for the year 1946–47 or 1947–48 on post-war refunds of excess profits tax, and for the deduction of tax at the standard rate for the year 1946–47), shall have effect, and be deemed always to have had effect, notwithstanding any time limit imposed by any other enactment on the assessment or recovery of income tax, and any assessment to income tax which may be required by reason of the operation of those sections in relation to any payment of or on account of any such post-war refund may be made at any time not later than three years after the end of the year of assessment in which the payment is made.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.

PROFITS TAX

23. Profits tax (miscellaneous charges)

Resolved.
That it is expedient to authorise all such charges to the profits tax (including charges for past chargeable accounting periods) as may result—

(a) from amendments of the law relating to the computation of profits or gains or losses for income tax purposes or to allow-

ances, deductions or charges for income tax purposes;
(b) from the inclusion of the Scilly Isles in an income tax division;
(c) from any provision as to the treatment for taxation purposes of overseas profits or income not freely remittable to the United Kingdom (including profits or income chargeable to income tax for the year 1952–53 or to the profits tax or the excess profits levy for a past chargeable accounting period);
(d) from the repeal of proviso (a) to subsection (2) of section three hundred and forty-eight of the Income Tax Act, 1952, or of paragraph 2 of Part II of the Seventeenth Schedule to that Act, or from the repeal applying to past profits for purposes of the profits tax or the excess profits levy where it applies to them for the purposes of income tax;
(e) from any provision enabling a person claiming double taxation relief in respect of income tax, the profits tax or the excess profits levy to postpone the whole or part of any capital allowances.

EXCESS PROFITS LEVY

24. Excess profits levy (miscellaneous charges)

Resolved,
That it is expedient to authorise all such charges to the excess profits levy (including charges for past chargeable accounting periods) as may result—

(a) from excluding from paragraph 10 of the Ninth Schedule to the Finance Act, 1952 (which enables deductions to be spread over more than one accounting period), any deduction for expenditure incurred more than twelve months after the end of the period of charge;
(b) from amendments of the law relating to the computation of profits or gains or losses for income tax purposes or to allowances, deductions or charges for income tax purposes;
(c) from any provision as to the treatment for taxation purposes of overseas profits or income not freely remittable to the United Kingdom (including profits or income chargeable to income tax for the year 1952–53 or to the profits tax or the excess profits levy for a past chargeable accounting period);
(d) from the repeal of proviso (a) to subsection (2) of section three hundred and forty-eight of the Income Tax Act, 1952, or of paragraph 2 of Part II of the Seventeenth Schedule to that Act, or from the repeal applying to past profits for purposes of the profits tax or the excess profits levy where it applies to them for the purposes of income tax;
(e) from any provision enabling a person claiming double taxation relief in respect of income tax, the profits tax or the excess profits levy to postpone the whole or part of any capital allowances.

25. Excess profits levy (iron and steel companies)

Resolved,
That, if under any Act of the present session a body corporate is set up having the function of returning to private ownership the iron and steel undertakings of companies which become its subsidiaries under the Act, then for the purposes of the excess profits levy the standard profits of any such company shall be computed as if the amount or value of such distributions made by it as may be determined under any Act giving effect to this Resolution were sums paid by it in cash by way of repayment of its share capital.—[Mr. Butler.]

GENERAL

Amendment of Law

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue, and to make further provision in connection with finance, so, however, that this resolution shall not extend to the making of amendments, of the law relating to purchase tax except amendments, if any,—

(a) making the same provision for or in respect of chargeable goods of whatever description; or
(b) relating to the administration or enforcement of the enactments relating to the tax; or
(c) reducing any of the rates of the tax generally for all goods to which that rate applies.—[Mr. Butler.]

5.13 p.m.

Mr. Herbert Morrison: It is not my purpose to open the debate for the Opposition. We shall continue the debate until Monday, and, naturally, it will be our wish that we should have time to think about what the Chancellor has said. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) will open the debate tomorrow with—at least, I imagine that will be the case—an analysis of, and comment on, the Chancellor's Budget statement.
However, I am sure that it would be the wish of all sides of the Committee that I should express to the Chancellor our congratulations on the clearness of the exposition of the finances of the past year and the financial arrangements for the coming period which he has given. We all followed and understood its presentation and that is, after all, perhaps, the highest compliment that can be paid to any Chancellor of the Exchequer. Moreover, the Chancellor has beaten the record of averages in that his speech was somewhat shorter than is customary.

Whether that means that it was safer to be shorter in title light of taxes to be imposed or not, I do not know, but his speech was somewhat shorter than usual. [HON. MEMBERS: "Taxation is reduced."] Perhaps it was because tax was to be taken off; I do not know, but the speech was somewhat shorter than usual and that is an achievement.
The Chancellor indicated some limited reductions in taxation. Looking behind the Budget, its purpose is largely to increase demand in various ways, and, running behind the Chancellor's remarks as to the economic tendencies of last year, it would appear that there were many things to worry about in reductions in the volume of exports, production and home demand and some tendency to unemployment, and I think that the Chancellor's proposals probably have some relationship to that anxious and, in some respects, worsening situation. However, the debate will continue and it will be the duty of the Committee to examine the proposals in detail when we have had a chance to consider them more fully, and the Finance Bill will follow. In the meantime, it is my duty, which I discharge with great pleasure, to congratulate the Chancellor on the clarity of his exposition. Let us hope that the forthcoming debates will throw further light upon our problems.
I have only one other thing to do. The Chancellor referred to the absence and illness of his colleague, the Foreign Secretary. I should like to say for this side of the Committee as well that we were very sorry to hear of the right hon. Gentleman's serious operation and hope that he will soon be completely restored to health.
Again, I congratulate the Chancellor on the clarity of his exposition and say that we look forward to the lengthy debates which will follow.

5.17 p.m.

Sir Herbert Williams: I join with the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison) in congratulating my right hon. Friend the Chancellor of the Exchequer upon the clarity of his exposition. With regard to some of the minor changes which my right hon. Friend has announced, naturally, we shall have to read his speech and, in due course, the Finance Bill, before we fully appreciate them. However, so far as the bigger items


are concerned, the situation is very clear. The cheers which greeted the Chancellor when he sat down were a clear indication that we thought his Budget was a good Budget.

Mrs. E. M. Braddock: It was a one-sided Budget. There were no cheers on this side of the Committee.

Sir H. Williams: The announcement about sugar will no doubt have a sweetening effect. Perhaps the hon. Lady will take that to heart. We must consider the thoughts behind the lack of cheers. I know what will generally be the thoughts about the 6d. cut in Income Tax. There is not a single hon. Member opposite who does not really rejoice in it, but will not say so.

Mrs. Braddock: What about those who do not pay Income Tax?

Sir H. Williams: People who have been lucky enough not to pay anything cannot be relieved.

Mrs. Braddock: They are meeting increased prices.

Sir H. Williams: Everything in the Budget is designed to reduce prices, so that intervention is no better than was the previous one.
On general issues—this is in order, but it is hardly the occasion—I was one of those who were sorry when, at the Commonwealth Conference, we did not take the initiative. There is not the slightest reason for the General Agreement on Tariffs and Trade to have to be got rid of by all of us together. There is not the slightest reason why we should not do it on our own, and if we did so, there would be many people following us in the queue in a short time. If we are to have flexibility we must be free to make any arrangements we like with any country we like. At present, we are not free. In due course we must get free.
I was delighted that the Chancellor made reference to convertibility. That was not, of course, the disastrous kind of convertibility of 1947 when we allowed all the other parts of the world which had a bit of sterling in London to take our dollars, for that was folly; I am talking about real convertibility in which we allow the £ to find its own level in terms of other countries. This is a little doctrine in which I am not alone; many

other people strongly hold my view. I do not regard that as an objective; it is a method.
The truth is that if there were a free £ there would not be adverse balance of payments, because the rate of exchange is bound to move to the level to which the balance of payments is forced, taking, of course, one or two precautions. There is a nasty thing called sterling credits. One of the tragedies of the war for this nation is that we owe a lot of people a lot of money for defending them. It is one of the real scandals in which all parties have had a part, and I do not know how we are to get out of it. If there were a free £ we could speak differently to these people. I think, however, that the amount is diminishing. There are the Egyptians, for instance, who are rude to us and we hand them over sterling credits. I would not give them any credit if they were rude to us. That is crude diplomacy, but I think it is the sort of diplomacy that they would understand better.
I want to raise one or two matters to which the Chancellor did not refer. First of all, I want to speak of post-war credits. They were the invention of the late Lord Keynes. They are part of the legacy of trouble which he has left to us. They amount to £481 million, I think, and it is quite obvious that the Chancellor of the Exchequer could not repay them all at once. At present, they are being repaid at the rate of £16 or £7 million a year. It will be many years before many people are paid off unless changes are made.
Post-war credits are one of the greatest frauds that the State ever inflicted on its citizens. Many people think that my right hon. Friend is still sitting on it and keeping it. It should be realised that the money has been spent, and that, therefore, repayment can only take place out of new taxation or new borrowing. It is terrible when a man dies at the age of 64 and has not had his post-war credit. Perhaps the credit is inherited by his son who is 30, and if he, too, dies at 64 the credit will not be paid. In some cases the credits will never be paid off.
There has never been a fraud on the citizen quite like that. True, my right hon. Friend is not responsible for it; he has inherited it. I wrote him the other


day on the question of people who have left savings certificates to a well-known charity. If they leave their post-war credits to the charity it may never get the money. The gift is no use to them. They can only put it in a safe, and lock it up in the hope that one day a Chancellor of the Exchequer will change the position. I did not expect anything to be done about it this year, but I hope that something will be done in the future. I might add that I am speaking for other people in this matter and not for myself. I have had mine.
The reduction in taxation, good as it is, is not enough. It is not enough, because the economies are not enough. I know how easy it is to urge the introduction of economies. The great mass of the public do not associate taxation with expenditure. They think that the Government should pay, but the Government have nothing but debts and the power to tax. There have been a series of agitations going on by various pressure groups, which are trying to press Members of Parliament to support their claims. I am resisting all of them, because I think that the greatest social and economic benefit that can accrue to this country is a reduction in taxation. We in this Committee are the buffers between the pressure groups and the passive majority. It is our duty robustly to take up that point of view. It is not always a popular line to follow, but if people know that we are doing it on the basis of conscience then, in the long run, they will support us.
Sugar derationing is not part of the Budget. It is an interesting statement made in the course of it, and it brought some jeers from the other side of the Committee. I see their point of view, because we have vigorously denounced bulk purchase and we still do. It is not quite so easy to get out of all the troubles of that system in five minutes. We have, however, brought to an end a good deal of bulk buying. There are now many commodities which are completely free of State control, and we can say that the Government have been steadily carrying out the principles which they advocated when in Opposition.
I would have preferred that the one million tons of sugar could have been bought outside the Ministry of Food.

However, I am glad that it has been bought and that we held back sufficiently long to enable the Cubans to come to their senses on the matter of high prices. That is why the Chancellor is able now to announce the abolition of the small sugar subsidy, and it may not produce any increase in price because this purchase from the Cubans has been made on satisfactory terms. We rejoice in that.
I wish that my right hon. and gallant Friend the Minister of Food were here so that I could congratulate him on the rapidity with which he is working himself towards unemployment. He has only meat and fats left on the ration now. They will last him a considerable time, but the Ministry has so reduced its activities that it will probably be absorbed in another Ministry, and then there will be a show of indignation from the other side of the Committee comparable to the protests which were made about the very desirable change in connection with the Ministry of Pensions and the Ministry of National Insurance. That amalgamation will give the ex-Service man greater facilities for airing his claim, because the new Department has 30 times as many offices than the old. Further, it is an economy.
I am glad that another fraud has come to an end, the war chattels fraud. My right hon. Friend the President of the Board of Trade inherited that, and he is not responsible for it. If any insurance company committed that kind of fraud the directors would have been in gaol long ago, for they would have been collecting the premiums and not paying out. It really was monstrous, and I am delighted that at last my right hon. Friend can look on the world as an honest man. He was honest before he became President of the Board of Trade, but he then inherited dishonesty. The Chancellor of the Exchequer has now relieved him of that dreadful burden.
The restoration of the initial allowances will certainly give considerable satisfaction to industry, but, on the other hand, we must realise that it is, in fact, the postponement of an obligation, not a relief from an obligation. It may be a good thing, at a time when industry is really overburdened with taxation, to postpone part of this burden into the future, because in the long run the burden will have to be met. However, I think it is a good thing that it has been restored


and I should like to ask a question about that. Although I am not in the industry I happen to be president of the Ballast Sand and Gravel Trade Association. It is the largest extractive industry in this country after coal mining.

Lieut.-Colonel Marcus Lipton: A monopoly.

Sir H. Williams: There is one disreputable contractor in the hon. and gallant Gentleman's constituency whom nobody ever heard about, but who tried a trick on the Camberwell Borough Council. He did not belong to any particular trade association.

Lieut.-Colonel Lipton: He was a member of the Association of which the hon. Member is the President. What he tried to do was to save public money by quoting a lower price than the price rate operated by the Association.

Sir H. Williams: The hon. and gallant Member is inaccurate in what he says. If he likes he can come along at any time to the offices of this Association.

The Deputy-Chairman (Mr. Hopkin Morris): I think this debate is going a little astray of the subject.

Sir H. Williams: There is no monopoly and there is no price ring. The hon. and gallant Member can consult the Ministry of Works, which knows all about the industry and which will confirm my statement. The hon. and gallant Gentleman is talking a lot of unadulterated nonsense.
I should be grateful if my right hon. Friend would look at the amendment proposed last year in respect of the curious position of the ballast and sand industry. They buy land and spend a good deal on it, but they cannot claim any depreciation. They are called upon repeatedly to increase output. They use vast quantities of sand and gravel for the purposes of constructing aerodromes and things like that. I rather gathered from the Chancellor that probably a repayment would be made, but as that point was not very clear I should be grateful if a further statement could be made.
Purchase Tax I have always disliked. It is on record that when it was introduced in 1940 by the war-time Government I was an opponent of it. I predicted that it would have evil effects and would prejudice our export trade, which it has done. I know that it is impossible

for the Chancellor of the Exchequer to write off all of the £300 million involved, but he has made a great advance in that direction. I am glad that he reacted to the debate which took place upon a recent Friday, initiated by my hon. Friend the Member for Handsworth (Sir E. Boyle), urging that aid should be given to the jewellery trade and certain ancillary industries. We were told that because of the effect of Purchase Tax it was impossible to have any real home market, and without a home market the chance of exports is very limited indeed. The Chancellor's cuts will be of the greatest possible help.
I must declare another interest. I was present last night at a very interesting performance of an amateur operatic and dramatic society in Croydon, of which I am the president. There is no remuneration paid, so we shall qualify for the full remission of Entertainments Duty. I have had many communications from other societies, and I know that very great satisfaction will be expressed at this Budget proposal. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) will agree with me. He is looking so happy at the moment because he has taken a foremost part in defending the claims of amateur theatricals in this respect.
The same applies to amateur sport, but I was just a little worried when my right hon. Friend said that nothing must be paid at all. There must be many amateur sporting clubs who pay a moderate sum to a secretary. [An HON. MEMBER: "He may not be a player."] I know, but the words used by the Chancellor seemed to exclude all payments in connection with sporting institutions. I am not sure whether I am right in my interpretation, but it would be unfortunate if amateur associations who happened to employ somebody in a secretarial capacity in his spare time should thus be debarred from the relief. I hope that the point will be looked into.
The abolition as from 1st January next year of the Excess Profits Levy will meet with approval on both sides of the Committee. My impression last year was that on neither side did we like this levy, which operates inequitably. I remember the case of a company which, by chance, was able not to make but to show large profits in the two particular significant years which are the basis of the levy.


Because the completion of contracts takes a long time it was quite impossible for the company to say that they had made a profit until the plant had been taken over and paid for, but they had to pay the Excess Profits Levy.
I know of another company whose normal business was completely wiped out by the war and who undertook various war-time jobs far less profitable to them than their pre-war occupation. Only in the last three years have they been able to get back into their pre-war business, because of the variety of restrictions, rules and regulations. Owing to circumstances over which they have no control the company have been forced to pay a very high proportion of their surplus in Excess Profit Levy, substantially greater than the net sum received by the shareholders. Of their total surplus, 70 per cent. goes in taxation. I am delighted that the levy, the greatest penalty on progress which was ever conceived, is to go on 1st January next.
As an ordinary, consuming citizen who manages to earn a little income, I am now to have 6d. off the standard rate of Income Tax. I am not a man who can retire and get a tax-free income. I do not understand all that. It is not so easy as people think. When I ceased to be in business and became a junior Minister, in 1928, I had a taxation problem, but I was assisted to solve it by the Inland Revenue people, who are most helpful if approached kindly. They sometimes make mistakes, but if you go in a straightforward way and ask them to help you they will do all they can. I received considerable assistance. If I had known a little more in advance what was to happen I might have done a bit better. That was the effect of not having had a legal training and of being brought up as an honest kind of engineer.
The real truth is that for years past the average, ordinary, decent, middle-class professional or salaried men or small employers have been unable to save anything. Their savings have gradually diminished. Week by week we hear that the total of new National Savings is less than the money drawn out, and even now the figures are faked because the accrued interest is included. People just have not been able to save. That is deplorable. We can say today that no young man

starting in business now would ever be able to retire on the income from his savings. That is absolutely wrong. Unless we can cut the rate of Income Tax there is no hope for the future.
We know that many workmen object to overtime. They say that it is not worth doing because they are only working for the Government. A leading employer in a very great business said to me some time ago, "I am absolutely at my wit's end to know in what way I can adequately reward my senior executives to keep them in this country so that they shall not be tempted to go abroad." Nobody in this Committee believes in the egalitarian State, or that some people should not be paid better than others. A person is entitled to be paid better and is entitled to spend what he gets. It is the system of taxation which drags everybody down to a dead level and is destructive of enterprise and ambition.
I am delighted with what the Chancellor has done, and I would ask the Financial Secretary to the Treasury to say "Thank you very much" to the Chancellor for having introduced such a Budget.

5.39 p.m.

Mr. Anthony Greenwood: It is not often that I find myself cooperating with the hon. Member for Croydon, East (Sir H. Williams), as I do tonight, in trying to keep the debate going. I am in this position for two reasons. The first is that I have certain views which I want to express, and the second is that unless we take advantage of today's debate we shall not be doing full justice to the gravity of the subject that we are discussing. Unless we discuss it today at some length it means that we shall have only three further days in which to try to do justice to the gravity of the situation and the magnitude of what I believe to be the failure of the right hon. Gentleman.
I say that because there must have been few occasions in the history of Parliament when the economic prophecies of the Chancellor have been falsified on so monumental a scale as those of the Chancellor have been during the last 12 months. However much some hon. Gentlemen opposite may question the conservatism of the Chancellor, at least they must do him credit for having proved the truth of what Mr. Disraeli once said, that


what we anticipate seldom occurs and what we least expect generally happens.
The right hon. Gentleman, very naturally from his point of view, put the best possible gloss upon the outcome of the prophecies he made last year. The Committee will hardly expect me to go to the same trouble that the Chancellor did to put a favourable complexion upon what has been happening. I want tonight to do what the Chancellor expressed himself as reluctant to do, to go through the Economic Survey. If we go through the Economic Survey, together with the statement made by the Chancellor today and the two other White Papers published during the last fortnight, we find a series of prophecies which have not been achieved during the past 12 months.
The Chancellor himself has told us this afternoon that during the past year he has had to find £200 million more than were budgeted for a year ago. He told us that, on the other hand, revenue was £222 million less than he had estimated in his last Budget speech. His revenue surplus—that is, his surplus above the line—was only £88 million. The Chancellor, with due modesty, did not tell us, that this is the smallest surplus that any Chancellor has had during the past six years. It seems even less impressive when one puts it against the expected surplus of £510 million which the Chancellor estimated a year ago.
A year ago, too, the Chancellor anticipated a rise in industrial production of 2 per cent. but if we turn to page 17 of the Economic Survey we find that it says that during the middle six months of the year industrial production was 5 or 6 per cent. lower than the year before, but by the end of 1952 it had almost recovered to the level of the previous year. That is a curious form of progress. The survey continues:
Over 1952 as a whole industrial production was about 3 per cent. less than in 1951, but the fall in the domestic product was proportionately smaller—perhaps no more than about 1 per cent.…
If we look at table 28 on page 39 we see the changes in production in a number of specified industries. Industry is divided in that table into seven groups, of which only two showed an increase in production during the past 12 months. One was metal manufacture, which increased by 2.4 per cent., and the other

was food, drink and tobacco, which increased by 2.8 per cent. If we look at the metal using industries, to which the Chancellor referred as being so important, we find that the fall was 0.4 per cent. Chemicals and allied trades dropped 1.6 per cent., textiles and clothing dropped 14.6 per cent., paper and printing dropped 15.6 per cent. and the other manufacturing industries put together dropped 9.2 per cent. The total overall reduction in industrial production during the year, instead of being the increase of 2 per cent. forecast by the Chancellor, turned out to be a reduction of 3 per cent.
How different are those figures from the glittering prospects which were opened up to the public by Tory literature during the last General Election. We were told by the Chancellor a year ago that exports were to rise. Today, the Chancellor has had to come to the Committee to tell us that exports have fallen and that the fall in exports last year was in the neighbourhood of 6 per cent. Hon. Gentlemen who wish to pursue that further will find the details on page 13 of the Economic Survey.
Indeed, the more we work through the survey the more we find that the only thing which has not fallen is the cost of living, for the general price level during the past year increased by 7 per cent. To put it in rather different language, as a people we spent £525 million more on personal consumption and, in return, we go £100 million less of commodities. The consumption of food, measured in terms of calories, was slightly less than at any time during the previous three years.
That is the progress the Chancellor has been making to which, as I said earlier, with his usual modesty, he did not call the attention of the Committee on this occasion. It reminds me of another remark of Mr. Disraeli's—"This shows how much easier it is to be critical than correct"—because, in the days of the Labour Government, nobody was more patronisingly critical of the Government than the right hon. Gentleman, and now nobody is more pathetically inaccurate in the forecasts he ventures from time to time to place before the House of Commons.
Lest it should be thought that I am putting an unfavourable interpretation upon what has been happening, let me refer the Committee to a leading article


in "The Times" on 30th March, which discussed the United Nations World Economic Report, covering very much the same ground as the Economic Survey. It said:
The United Nations estimates suggest that production in the United Kingdom dropped more in 1952 than in any other country, except Denmark, compared with the previous two years. It dropped back to the 1950 level, whereas in the group as a whole"—
that is, the group of industrialised countries—
it increased by 9.6 per cent. compared with 1950.…British wages…rose by less than in any other country except the United States and Belgium. Only in this country did the cost of living increase more in 1952 than in 1951. The movement in British real wages was the least favourable, and the United Kingdom and Australia were the only countries in which ordinary consumption was not higher in 1952.
That is after the first whole year of Conservative administration under the economic guidance of the right hon. Gentleman the Chancellor of the Exchequer.
The right hon. Gentleman pleads in his own defence what he calls the improvement in our balance of trade position. He told us in the course of his speech that his Budget last year had been designed to rectify an adverse balance of payments position. The overall improvement is in the neighbourhood of £689 million, but the Chancellor was very fair about that and admitted that £117 million of that amount was accounted for by defence aid from the United States. Therefore, we are agreed that the general overall improvement is £572 million.
I do not think that the Chancellor emphasised as much as he might have done the reasons why that happy state of affairs has been achieved. It is quite apparent, from reading the Economic Survey, the balance of payments White Paper and other Government publications, that the overwhelming factor in producing this improvement in our balance of trade position has been the improvement in the terms of trade which are now much more in our favour. There is no doubt, when reading the documents to which I have referred, that this factor alone accounts for more than half the improvement of £572 million.
Unfortunately, in the last few months the rate of improvement in the terms of

trade has been tending to slow down. It may possibly gain speed because of the possibility of peace breaking out throughout the world, but if we get a reduction in commodity prices it may well be that it will be followed by a general slump. In any event, the position which this country has to face is that over the long-term future there is little likelihood of any substantial reduction in the price of raw materials and of foodstuffs, while there is every likelihood that we shall be forced to reduce the prices of our exports because of the severe competition which is already being felt, particularly from Germany and Japan.
Nor did the Chancellor emphasise as fully as he might have done the next main item which was responsible for the improvement in our balance of payments problem. That, of course, was the fall in the volume of imports. When the Chancellor referred to it, there was one thing that he might have said or emphasised in his favour more than he did. He is to be congratulated on the fact that the saving which took place was almost entirely in the case of imports from the non-sterling area. That is something upon which the right hon. Gentleman is to be congratulated, but taking it over the whole range of our imports the substantial reduction was only possible because of lower production here at home.
Had we not had a recession in the textile industries during the past year, the Chancellor would not have been able to cut imports as much as he did without seriously reducing the country's stocks; and I agree with the right hon. Gentleman that the amount of stocks has not seriously been reduced. But the amount of stocks in the pipeline has been reduced, and we must contrast 1951, during which the Labour Government increased stocks by £465 million, with last year, when the Government were responsible for a decline of about £100 million in the value of stocks.
The third reason which accounts for the improvement in our balance of payments is a somewhat technical one, which I do not propose to go into and which relates to the timing of the payments which have been made. I must emphasise, however, that that is peculiar to this year and cannot be repeated year


after year. The net result of the improvement in our balance of payments position has been, as the Chancellor said, that we have stopped the drain on our reserve of gold and dollars, but it would be a great pity if this Committee, and, as a result, the country, got a wrong impression of the comparative stability that has been achieved.
At the end of March our gold and dollar reserves were 2,166 million dollars. That is slightly less than the figure in December, 1951, but when we remember that in June, 1951, our reserves stood at 3,867 million dollars and were reduced during the next six months by 1,500 million dollars, we begin to see how slight our gold and dollar reserves are. I hope that from the optimistic remarks made today by the Chancellor the country will not get the impression that the situation can justify complacency or relaxing our efforts in any way.
The Chancellor said—I thought it was an under-statement—that we had left room for expanding exports. Every Member would agree that the only real solution to our balance of payments problem is a material expansion of exports from this country. One of the tragedies of the situation, however, is that during the past year we have not done as much as we ought to have done to increase the efficiency of our manufacturing industries. I intend later to congratulate the Chancellor on some of the things he has done, but it is regrettable that in this key year, when Japan and Germany have been redoubling their efforts, we should be in a position where capital outlay on plant and machinery between 1951 and 1952 fell by 2½ per cent. and on vehicles, ships and aircraft by 12½ per cent. It has been lamentable that in the face of increasing competition from abroad, we should have denied to industry the capital expansion upon which it ought to have been embarking.
In the last quarterly Statistical Review of the Cotton Board, I am shocked to find that whereas last year we had already sunk to the second place in the list of the major cotton exporting countries, this year we have sunk further and have become only third on the list. In 1952 the United States of America became the world's leading exporter of cotton piece goods, with Japan second, the United

Kingdom third, and India fourth. In 1951 the order was Japan, the United Kingdom, the United States and India. Let it not be forgotten that the United States had a negligible quantity of exports in the world markets before the war.
I was a little alarmed when the Chancellor said that higher wages must not be allowed to price us out of the export markets. I hope that we shall not get a fixation about the importance of wage rates in these matters. Wages are only one of the factors that go to make up the price of the finished article, and if the United States, with infinitely higher wage rates than we have, is able to compete successfully with us in the markets of the world, it is apparent that there must be something more than wage rates which is wrong with the cotton industry.
I congratulate the Chancellor on his decision to restore the initial allowances. Looking back, I think it was a mistake that they were ever dropped. My pleasure at this, however, was somewhat mitigated by the fact that a few moments later the right hon. Gentleman talked about the importance of monetary measures, which seemed to imply some further change in the Bank rate and, consequently, the rate at which industry may borrow money. I am glad that the Chancellor has decided to abandon the Excess Profits Levy, but I wish that he had listened to the advice tendered so generously from these benches a year ago and that the levy had never been embarked upon.
I come now to the Chancellor's proposal to reduce Income Tax by 6d. I confess that I am not very happy about this. The Chancellor told us how a £45 million benefit would go to corporate industry. I wish there was some reason for sharing the Chancellor's confidence that industry would use that benefit of £45 million for re-equipping itself, but there is not very much evidence that that is likely to take place.
When we remember that a man with a wife and two children has to earn an income of £500 a year before he pays Income Tax of 30s. a year, there has been no substantial case, from the point of view of the public as a whole, for reducing Income Tax on this occasion. I would much sooner have seen some benefits going to people who need them,


and particularly to the old-age pensioners, instead of giving money to industry in this way, especially when we remember that old-age pensioners are today living on a diet which gives them a calory intake of only 1,500 calories a day and that when they have paid their rent and other necessities, they have, on the average, a good deal less than 2s. 6d. a day with which to pay for food. It is a psychological mistake, and an action of very doubtful economic value, for the Chancellor to have reduced Income Tax under these circumstances.
There are two other things upon which I congratulate the Chancellor. I am glad he has decided to make some alleviation of the burden of the Purchase Tax. The right hon. Gentleman would be the first to admit that I tried very hard a year ago, in co-operation with my hon. Friends, to persuade him to make rather greater concessions in that direction. It is a good move that the rate of the tax is to be reduced. I agree with a great deal of what the hon. Member for Croydon, East (Sir H. Williams) said on this subject. I think that the Purchase Tax is a bad tax. It was justified by the exigencies of the economic situation of the war and of the immediate post-war years, but I cannot think that it is a good tax in comparatively ordinary times like the present.
Far from being a weapon against inflation, I believe that the Purchase Tax has become inflationary in its effect. I only wish that the Chancellor of the Exchequer had warmed the cockles of our hearts a little more by saying that this reduction of 25 per cent. was only the first step in a four-year plan to get rid of the Purchase Tax altogether. I do not believe that we are likely to get a healthy economy so long as this grossly inflationary factor is at work.
I should like to remind the Committee of what Sydney Smith said well over 100 years ago on this question of indirect taxation. He said:
The school boy whips his taxed top, the beardless youth manages his taxed horse, with a taxed bridle, on a taxed road, and the dying Englishman, pouring his medicine, which has paid 7 per cent., into a spoon that has paid 15 per cent., flings himself back upon his chintz bed, which has paid 22 per cent., and expires in the arms of an apothecary who has paid a licence of £100 for the privilege of putting him to death.

That is not a grossly exaggerated description of the taxation position which we have reached in this country.
I am sorry that the Chancellor has not taken a more courageous stand in regard to the fuel tax. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) and the present Chancellor both increased the fuel tax in the Budgets of last year and the year before. I think it is true to say that today the tax on petrol is higher than the tax upon any other commodity. I believe it is something like twice the amount of Purchase Tax payable last year on what my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) called the millionaire's mistress's mink.
If we tax petrol at this rate we are not only increasing the cost of living of workers in industry, but also the cost of production. It increases the cost of production, because 70 per cent. of the goods of this country are carried by road transport and that means we are placing an additional burden on export industries. If, instead of reducing Income Tax, the Chancellor had reduced the fuel tax by one-third—which would have cost only £60 million—that would have conduced even more to the encouragement of the export industries.
Representing a Lancashire constituency, I welcome, of course, the decision of the Chancellor that cricket shall be put in a specially privileged position. If I understand it correctly, amateur cricket will be wholly exempted from the effects of Entertainments Duty—[HON. MEMBERS: "All cricket."] All cricket will be wholly exempted from the effects of Entertainments Duty. That is something which will make Lancashire and Yorkshire Members much more warmly disposed to the Chancellor than many of us were before.
I have tried to face the Budget as fairly as I can. I have pointed out the extent to which the prophecies of the Chancellor last year were falsified by events and I hope I have given the impression that I have not a great deal of confidence in the accuracy with which he has prophesied on this occasion. I would sum up by saying that this is an unimaginative Budget, that it makes no substantial contribution to the real problems of the time, and that in my view the proposals do not merit the confidence of this Committee.

6.4 p.m.

Mr. Eric Johnson: I hope that the hon. Member for Rossendale (Mr. Anthony Greenwood) will not mind if I do not follow him in his very interesting speech, but I do not want to take up much of the time of the Committee. I have three matters to which I should like to draw attention, points which, I think, essentially affect the individual rather than the wider national problems.
First, I should like to give a general welcome to what the Chancellor has very rightly described as an incentive Budget. To my mind it seems to give not only a considerable amount of encouragement to industry, but does give something to the individual as well. Here, I very much agree with what has been said about the reduction of the Purchase Tax. I think that a tremendous step forward, which will do a great deal to bring down the cost of living.
Of the three points to which I want to draw attention the first is in connection with handicapped children. The Committee will be fully aware that at present regulations provide that family allowances are payable in the case of children between the ages of 15 and 16 where those children are receiving full-time instruction in school, or are apprentices. I want to refer to the handicapped children whose instruction is provided at home, as is done in Manchester by the local authority. This is done by the local authority because of the obvious difficulty of sending these children to school and fitting them into suitable classes. They need a very specialised form of instruction; indeed, they need almost individual attention.
I believe that the spirit of the Act which covers family allowances was probably meant to cover children such as these, but unfortunately, the letter of the Act does not do so. Family allowances cannot be paid on their behalf, because it is not considered that they are receiving full-time instruction at school. The school, so to speak, is brought to the child instead of the child being brought to the school. The number is very small. In Manchester, in the first term this year there were only 14 children receiving this instruction and only one of them was between the ages of 15 and 16.
I think it would mean a very small amendment of the present regulations to ease what undoubtedly is a hardship and the cost would be quite insignificant. I hope that the Financial Secretary will pass this on to the Chancellor so that perhaps he will consult the Minister of National Insurance to see whether this small concession can be made. I am sure it is something which would appeal to his warm heart. I do not think that his hard head, as Chancellor of the Exchequer, will tell him that this is something the nation cannot afford.
My second point is an old one and concerns the earnings of widows and old-age pensioners. I do not think I need make any apology for returning to this subject, because I believe the case for allowing old people to earn more without any deduction being made from their pensions remains a good one and that the arguments in its favour apply with equal force to widows, particularly widows over 50. It is sometimes said that if these people can go on working they do not need a pension, but that is a very hard-hearted argument. In effect, they are told that 72s. 6d. a week, made up of 32s. 6d. pension and 40s. they are allowed to earn by part-time earnings, is enough and that if they feel 72s. 6d. is not enough they can try to get National Assistance, or virtually forget about their pension and try to get a full-time job.
It is undoubtedly the case that many old people cannot undertake full-time work and it is certainly not easy for the widow over 50, who has probably spent her working life looking after her home and bringing up a family, to get a full-time job. Even if the old people get regular work it is not likely to carry a wage which makes it particularly attractive. A widow whose husband died and left a house and little else to her undoubtedly finds it very hard to make both ends meet. Rates have gone up, electricity charges are higher and many other things are more expensive.
I have a case of that kind in mind of a widow who managed to get a job at £4 16s. a week as a shop assistant. The result is that her pension is reduced to 10s. and she pays Income Tax as a single person. Her net income is, therefore, about £4 17s. a week and the amount she gets for working a five and a half day week at a relatively low-paid job is only


£1 4s. 6d. more than she could get in a part-time job while drawing her pension.
It might be said that there is no evidence of hardship, but I think we ought to be able to do a little more for someone in that position. If the amount which could be earned without deduction from the pension could be raised to 60s. that would enable elderly people to earn nearly as much by doing a suitable part-time job as they could get now by doing a low paid full-time job.
I am convinced that this limit of 40s. is too low. I ask, once again, that the Chancellor might consider whether it can be raised to 60s. If that cannot be done, I should like to make another modest suggestion: would my right hon. Friend consider deducting 6d. instead of Is. for every Is. earned between 40s. and 70s., with the full deduction, if need be, in respect of larger amounts? I hope that sympathetic consideration can be given to this problem, because it would help a group of people who are finding things very difficult and who have deserved well of the nation.
My third point is entirely different from the two I have just mentioned: it concerns Empire savings. On 16th December last, in answer to a Written Question I put to him, the Chancellor said that he recognised the need for a high level of internal savings if we were to make our full contribution to Commonwealth development. He added:
I am satisfied that there are at present adequate facilities for National Savings and I commend these to all small investors who may rightly wish to play their part in Commonwealth development."—[OFFICIAL REPORT, 16th December, 1952; Vol. 509, c. 163.]
Since then I have had a number of letters from a variety of different people and organisations expressing interest in that very tentative suggestion. I do not believe—I may be wrong—that the ordinary small investor sees much connection between the National Savings certificates and savings bonds which are available today and Empire development. He is not well-informed on these matters.
Frankly, small savings have not been a particularly attractive proposition to many people for a considerable number of years. The money value of the interest

received remains the same while people see the real value of their savings become less and less as the purchasing power of money falls. I hope, indeed I believe, that my right hon. Friend's Budget may have done something to remedy that position and to make saving a paying proposition. At the moment, however, many potential savers of say 5s. per week feel that they might just as well "give it a run" on a football pool. That may be a very reprehensible point of view, but I am bound to say that I find it natural.
I believe that the word "Empire," which I have used quite deliberately, still means a good deal to many people who are proud of what I am not ashamed to describe as our great Imperial heritage. They would like to do something more than they feel they can now do towards Empire development. If there were an issue of what I might call an Empire Savings certificate, and if its launching were accompanied by a broadcast appeal by the Chancellor of the Exchequer, or perhaps by the Prime Minister himself—I think it is something which we would all agree he would do supremely well—asking people to invest for Empire development it might make a great emotional appeal to the small investor. I am not qualified to make suggestions as to the technical aspects of a scheme of that kind, but I ask whether the matter can be looked into. I believe that it would be well worth while, and I think it might prove to be a considerable success.

6.14 p.m.

Mr. Norman Smith: Before I proceed to focus the attention of the Committee on the major weaknesses of a Conservative Chancellor's capitalist Budget, I should like to refer to what the hon. Member for Blackley (Mr. E. Johnson) has just said about small savings. I agree with him that the need for small savings is very great in this age in which we find ourselves. I agree with him—he may be surprised at this—that one reason why there is a great need for small savings is that this country has much to do in the years ahead to develop what the hon. Member calls the British Empire and what I prefer to call the British Commonwealth. I regard that as a most important issue.
His idea that we should get small savers to put up their money in response to a broadcast appeal by the Chancellor of the Exchequer or even the Prime Minister is, in my view, just a little naive. I am quite sure that it would not happen. I have always refused to take any part in the savings movement in my constituency; it would be hypocrisy if I were to do so. I am not saying that those who take part in the savings movement are hypocrites. On the contrary, I think that most of them—all of them, for aught I know—are good citizens, striving to do their best for their country according to their somewhat limited lights.
The promoters of the savings campaign in my constituency include some of the ablest and most successful capitalist industrialists of Nottingham. I know some of them personally, and I am privileged to enjoy their friendship. They are not hypocrites, but for the life of me I cannot understand how they can reconcile their action in asking other people to buy Government securities which, in the nature of things, must deteriorate and depreciate as time goes on, with devoting at all events most of their own savings not to Government securities but to industrial equities.
I would not dream of putting my exiguous savings into Government securities or any other form of rentier investment. I tell the hon. Member for Blackley, whom I credit with great sincerity in this matter, that to the small saver the obstacle is quite simply the knowledge which he has, born of bitter experience, that the £s he lends today by way of Government stock will be worth less when he comes to draw them out, and that the interest he will be paid will be of less value than the money he paid in. While we have this constant process of depreciating money, which has gone on, almost uninterrupted, since the time of the first Elizabeth, we shall not have wholehearted support of the savings movement by even the more thrifty working class in this country.
The way to get small savings—I advocate this here and now—would be to tie the redemption and the interest payments to a price index, so that those who subscribe to Government bonds or any form of Government saving would have an assurance that the money which they later drew out either as interest or as repay-

ment of their savings would be worth at least as much as the money which they put in. That is a very simple thing to ask, but I know it is revolutionary. It cuts right across the orthodox conception of money. The best definition of money I know is that if one has money one has the right to draw cheques on a bank; and bankers do not want to be bothered with the sort of money that would have to be revalued in terms of commodities as time went on.
Nevertheless the Committee is indebted to the hon. Member for Blackley for raising what is a most important issue. It is one of those issues which the Chancellor today completely neglected. His Budget is a capitalist Budget; it is a pessimists' Budget. His is one of the worst Budget speeches to which I have ever listened. I can forgive the right hon. Gentleman for being wrong in all his estimates, in all his forecasts. The "Economist" the other day published an article headed "What went right?" When things go wrong people ask "What went wrong?" Something went right. Nothing that the Chancellor arranged, contrived or proceeded to organise worked out as per programme, but the sum total of the result, the resultant, to use an engineering term, was not far from what he wanted. Something therefore went right, and of course, as my hon. Friend the Member for Rossendale (Mr. Anthony Greenwood) said, it was the terms of trade which, during the last 12 months, turned substantially in favour of this country.
I can forgive the Chancellor for being wrong in his estimates, but I cannot forgive him for having no fire in his belly. The academic speech he delivered this afternoon was in some ways a competent performance. But we want something more than a competent performance in this Committee at this time. We want encouragement to believe in the future. The only future the right hon. Gentleman could offer us was a future of unrestricted world-wide capitalist competition. Not a word did he say about the present economic problems besetting this country. What can he offer us in the future? Co-operation and collaboration with other sterling nations in order to render us independent of the dollar area? Not at all. All he could say was that he hoped in the future there will be freer world trade and a convertible £. In other


words, he hopes we will get back to the middle of the 19th century, to the reign of Queen Victoria, with freedom of movement of money, freedom of movement of goods and—he did not say so, but I suppose he implied it—freedom of capital movement and freedom of migration. That is a mid-Victorian policy; undiluted capitalism; capitalism with the lid off; cut-throat competition. That is all the party opposite has to offer. There is no hope whatever for the people in anything which the Chancellor has said.
The bulk of the concessions in his Budget will go to firms. That is to say the greatest benefit will be derived by firms owned by absentee shareholders who go in and out through the Stock Exchange. We shall not improve British out-look by holding out a bait for people who get into the textile industry today, transport tomorrow and into some other industry the day after. Absentee shareholders are not the people to whom the Chancellor should offer encouragement. They are not the people in whose hands lies the future of British industry.
This Budget is a bankers' Budget. I resent very much the taunt which the Chancellor had the audacity to throw across to these benches, that the consequences of dear money had not been on anything like the scale which some of us had forecast. What had we on this side of the Committee ever said about the consequences of dear money? My right hon. Friend the Member for Battersea, North (Mr. Jay) and I myself estimated that the effect on the Budget would be £100 million a year. Actually, as we have learned this afternoon, the effect of dear money on the Budget is £77 million a year.
That is the additional charge for National Debt interest. The Economic Survey for 1953 said that in 1952 the additional National Debt charge was £60 million. In the last three months £17 million have come up and, as one would naturally expect among Treasury Bills of three months' currency, there is a further three months' time-lag in the effect of the increased Bank rate. Working this out, it will be another three or four months before the whole thing gets fully into its stride. If the first quarter of this year saw an increase of £17 million, it is not fantastic to suppose that the second quarter will also, and then the

£77 million becomes £94 million, which is not so far from the £100 million which some of us estimated.
The last Budget was a bankers' Budget and this is a bankers' Budget. The money market in the City of London was the chief beneficiary under the 1952 Budget, and the policy of dear money is to be continued. I am saying nothing whatever about the effect on local authorities, though goodness knows they are beginning to feel the pinch. In my own constituency there is an immense new suburb going up across the River Trent. Unfortunately it is three miles to the west of the only bridge in that neighbourhood, Trent Bridge. The result already is that 2,000 workers on this new Clifton Estate have to cycle or bus two miles east, cross the crowded Trent Bridge, and then cycle or bus two miles west to where the factories are.
We in Nottingham approached the Ministry of Transport and the Parliamentary Secretary has been most helpful. He says, "Yes, you ought to have your bridge, and if I can get it for you I will." But the obstacle is the restrictions on the capital investment programme. So far it has not been authorised, and there is no steel—

Mr. Ellis Smith: I hope my hon. Friend is more fortunate than we are in the Manchester area, where at Trafford Park we have been waiting for 50 years.

Mr. Smith: We have not waited for 50 years. This estate is only just starting, but already 2,000 or 3,000 people are living there. It is not a case of steel, it is a concrete bridge. But the restriction on capital investment is the obstacle to our obtaining it. Here is the dilemma of the Tory Party in Nottingham. Goodness knows, my majority is very small. They thought they would get me out last time, and they hope to get me out next time.

Mr. Gerald Nabarro: Hear, hear.

Mr. Smith: They will not, for this reason that on this question of the Clifton Bridge I have got them. It is like a fork, and they are on one prong or the other—

Mr. Nabarro: Will the hon. Gentleman give way?

Mr. Smith: No. The hon. Member for Kidderminster (Mr. Nabarro) is too fond of interrupting without knowing in the least what the person speaking is going to say. I will give way, but not until I have made my case.
The restrictions on the capital investment programme have postponed the construction of this bridge. The Chancellor said this afternoon that no difficulties would be placed in the way of firms who wished to extend their plant and premises. Does that apply to local authorities who wish to carry out work of social value? The absence of a bridge at Clifton is causing an enormous waste of money which is spent on dollar oil, the wear and tear of motor vehicles and the waste of time of workers going to work, as well as increasing the congestion on Trent Bridge. I would like the Economic Secretary to the Treasury to give the Committee a clear lead on this matter.
When the Chancellor said that he will place no obstacle in the way of firms who desire to undertake building programmes to extend their plant, does that mean the relaxing of the restrictions on the capital investment programme so far as local authorities are concerned? We have converted the Parliamentary Secretary to the Ministry of Transport most completely. He admits the cogency of our case, and the saving of dollar oil, and wear and tear on transport, time and tempers which would result. Have we also converted the Treasury?
Even if we get the bridge, that will not help the Tory Party electorally, because Nottingham will have to pay, not 3 per cent. for the loan of £300,000, but 4¼ per cent. if they are lucky. When they go into the market they may have to pay A½ per cent. After all, when we have Anglo-Iranian putting out 5 per cent. debentures at 98½, it is not easy for Nottingham City Council to raise money at 4¼ per cent. Even if we get the bridge, under the dear money policy the cost will be £4,500 a year more than it would have been but for that policy. The Tory dear money policy will put a ½d. rate on Nottingham for that bridge. That is an example of how that policy is working out.
Nothing was said this afternoon by the Chancellor which would lead any local authority to expect that there will be a

lessening of the restrictions on the capital investment programme. What a preposterous thing this business is. The Chancellor's Budget says £77 million a year is the cost of the dear money programme in financing the National Debt, and all that £77 million is the cost of short-term borrowing. It is entirely and exclusively the added cost of Treasury Bills. I am putting up to the Committee the idea that the Treasury Bill system is an imposition on the public, and that it really is time it was brought to an end. I have no objection to the money market so far as it concerns commercial bills; let them go on. This alleged favourable influence upon the overseas balance of trade is vastly exaggerated.
Indeed, I would point out that the Economic Survey for 1953, in paragraph 27, stated that one of the main reasons for the fall in the United Kingdom's net income from invisible transactions was:
increased interest payments on sterling balances, reflecting the general rise in interest rates in this country.
The Economic Survey admitted that the overseas balance of trade was affected adversely by dearer money in this country, and, if dearer money did not help the overseas balance of trade, what in heaven's name is the justification for dearer money? We have now £77 million a year, and by the time the thing really gets going, it will not be so far short of £100 million on Treasury Bills alone.
A Treasury Bill is not a good bill. Anybody who has had any financial transactions at all in that world knows that the only good bill is a bill drawn on produce actually going into consumption. A Treasury Bill is not that at all, and, for a large part of it, this money market business is merely the Treasury going into the City of London and borrowing, from people who have balances to lend, in anticipation of revenue, most of which flows in after Christmas. Why should the Treasury have to incur interest burdens for the taxpayer in order to borrow money in anticipation of revenue from people who, if they paid their taxes punctually, would not have the money to lend? [Interruption.] Yes, that is what it adds up to. It is very convenient for these firms to lend their balances for two or three months, but it is a burden to the Treasury.
It ought to be a simple book-keeping transaction between the Treasury and the


Bank of England, which keeps the Government's account, and there is no reason at all why the Treasury should borrow in anticipation of revenue. Let the Treasury issue its own Treasury cheques, which the Bank of England would accept and which would form the basis for the Bank of England to meet any demands subsequently made by the other banks. This business of the short-term money market, so far as it involves Government borrowing, is an imposition on the public and should be brought to an end.

Mr. Nabarro: Is the hon. Gentleman really trying to convince the Committee that there is something immoral in firms keeping in their till moneys set on one side for future payments of taxation? For instance, in the case of Income Tax, money assessed for tax for 1952–53 is not due for payment until some 12 months later. Why should not that money be put to productive use by lending it to the Treasury on a short-term basis?

Mr. Smith: That is not putting it to productive benefit by lending it to the Treasury. Let them not invest it in three months' bills, but in other ways. What I am complaining about is that the taxpayer is burdened because the Treasury, happening to be, on a week-to-week basis, short of money, does not create its own, instead of borrowing from people who happen to have these balances.
Let us bring this matter into a much bigger field. Under the Labour Government, interest on short-term loans and Treasury Bills was one-half of one per cent. per annum, and the market managed on that right from 1945 until 18 months ago. Why, when they managed on one-half of one per cent. on these balances, must we be burdened with a rate of 2⅜ per cent.? One is driven to the conclusion that the Conservative Pary looks after its friends in the many financial interests in the City of London, and that the taxpayer is mulcted in this Budget statement of £77 million a year, quite unnecessarily in this regard.
I advocate, first, that the money market should be reviewed as it affects Treasury short-term borrowing, and, consequently, in that part of the money market con-

cerned with this week to week borrowing, the interest should be reduced from 2⅜ per cent. to one-half of one per cent., with a substantial saving to the taxpayer. The amount is already £77 million in respect of nine months of the financial year, and it will eventually be very close to the £100 million.
But that is not the main complaint that I have against this Budget. Here is the Chancellor using phrases like these. He said, "The menace of inflation was lifted in 1952." He said inflation had been checked in 1952, and yet what happened in 1952? We have been told that the danger of inflation is the danger of an excess of money—far too much money knocking about. The Chancellor said—and he reiterated it several times this afternoon—that in the last 12 months that danger has been checked; indeed, he used the word "lifted." Anybody would therefore think that in 1952 the amount of money in the country had decreased, but it had not decreased. On the contrary, the amount of money actually circulating in the country, so far from having decreased, had substantially increased, and the extent of the increase was given in the Economic Survey for 1953 as £119 million, that being the increase in the aggregate of bank deposits during the year.
This sum of £119 million was brought into existence out of the void, out of nothing; it was merely the consequence of a book transaction. The bankers dipped their pens into their inkwells and made entries in their books, and, lo and behold, there was £119 million more at the end of the year than there was at the beginning. Now, the "Economist," last Saturday week, gave the figure not as £119 million; that paper said that, by mid-March, bank deposits were up by nearly £160 million, which is a good deal more.
This business of the banking machine bringing money into existence out of nothing was in full swing during the year 1952, when the total of bank deposits increased by £119 million, on the Government's own admission, and yet, in spite of that fact, the Chancellor can repeat today that inflation has been abated. Inevitably, therefore, the Committee is driven to the conclusion that the amount of money in the country represented by bank deposits can be substantially increased without there being inflation, and that, of course, is only common sense.
If I may use a reductio ad absurdum, if half-a-dozen Englishmen were wrecked on a desert island, they could proceed to operate a simple economy and could manage with a certain quantity of money, but if we have 50 million people living in these islands, they will want more money than the six men on the desert island. It follows from that, therefore, and it is pure and simple reasoning, that if in 12 months we have an increase in the population and increased productivity, the probability is that we shall want more money. Indeed, the total amount of money in this country has been increasing at a steady rate ever since I was born 63 years ago. In 1914, bank deposits were £1,000 million; in 1919, £2,000 million; and in 1945, £4,400 million. They are now £6,000 million, and all this extra money has been brought into existence out of nothing by bankers dipping their pens into inkwells and creating money.
Lest the Committee should not be able to understand this, let me remind them that in this country nearly all business is done, not with the notes in our wallets or the coins in our trousers pockets, but with cheques met by bankers after creating money, and, in that way, making it possible to circulate more cheque money. Most business transactions in this country are conducted by cheque money, but, listening to the Chancellor today, nobody would dream that the quantity of money in this country was regulated by the bankers. That is a fact about which the right hon. Gentleman said nothing, but it is true.
The Chancellor made the valuable admission that notwithstanding a substantial increase, namely, £119 million, in the quantity of cheque money in the country, there is still an abatement of inflation which happily puts an end to the nonsense talked about inflation being the simple reply to the argument of people like myself who say that just as it is right, and has been recognised as right for centuries, that coins should be minted only by the State and that private enterprisers who try to mint their own coins should be punished as criminals, so it is right that new money brought into existence in order to circulate as cheque currency, in the way that bank deposits do, should be brought into being not by the commercial banks, but by the Treasury.
I suggest that this £119 million should have come into existence in the form of Treasury cheques supplied to the Bank of England. It would be a mistake if money created out of nothing were year by year to be used merely to pay off the floating debt, or any other debt. If it were used for that purpose, all that would happen would be that the taxpayer would be relieved of £119 million of floating debt costing him 2⅜ per cent. and that the banks would have an extra £119 million to lend by way of advances to industry at something like 5 per cent. Above all things, it is desirable and indeed necessary, if this country is to have any future, that credit should be socialised.
In the four years to the end of 1952, the total increase in bank deposits amounted to £335 million, which is an average of £82 million a year. That, I believe, is something like 1½ per cent. of the total bank deposits. It used to be reckoned as orthodox between the wars that there should be a yearly increase of 3 per cent. in bank deposits, and there was, in fact, such an increase except during the depression of 1931–32.
We are on the threshold of the atomic age and live in an age when the technological plant becomes ever more massive in industry. We live in an age when more and more of human effort has got to be put into the business, not of making the goods which people want to consume, but of making the machines to make the goods, and, indeed, of making the machines to make the machines to make the goods.
Hon. Members who serve as I do on the Select Committee on Estimates, and who have been investigating, as I have in the last two or three years, the cost of re-armament, will be aware of the substantial increase in what I call the burden of technology. I sometimes cherish the futile wish that when I was born in 1890 all efforts by scientists and inventors could have come to an end, in which case there would, of course, have been no cinemas, motor cars, aeroplanes or broadcasting. But I know that it is quite impossible to restrain the inventors and the scientists.
We on the Select Committee of Estimates have had it brought home to us that it takes roughly seven years for an aeroplane to get from the drawing board


into mass production, and that long before it gets into mass production it becomes obsolete. Up and down the country there are machines in use which, before they have been in use for two or three years, become obsolescent. We live in an age when the advance of technology is such that the increase in the quantity of money needed by the country year after year has to increase at an ever substantially accelerating rate.
It is only common sense and common decency that this annual increment of money which circulates as cheque currency should be created by the Treasury and used by the Government not merely in order to repay debt, but to get for the country an active equity interest in modern up-to-date factories and so gradually build up a non-tax revenue for the country. That is what has got to be done. From what I can see of it, poor old John Bull owns nothing except debt.
So far as I am aware, no one in this Committee has ever put forward any suggestion for decreasing the national debt. I do not particularly want to decrease it, but, as the years go on, I want to build up a national credit account represented by Government holdings of equity stock in the best and most modern industrial concerns, and to build up as the years go by on an ever increasing non-tax revenue in order to counteract the debt interest which this country has to meet.
I do not believe in the capital levy. I do not think it is any good, and I object to it for three reasons. The first reason is because Sir Stafford Cripps had a capital levy on the clear understanding that it was once for all, which means that it cannot be repeated for 10 to 15 years. The second reason is because it achieves the maximum amount of friction with the minimum amount of good. The third reason is because it is a formidable instrument of deflation which was calculated to bring about unemployment.
The Committee should not believe that just because bank deposits amount to £6,000 million, that represents the amount of cheque money at the disposal of the citizens of this country. Believe it or not, that money is turned over roughly every three weeks. Last year the clearing banks put through £110,000 million, and

if we divide £6,000 million into £110,000 million we find that the money is turned over roughly every 18 days. That money is bound to go on increasing, so let it be socialised.
I condemn the Chancellor because he has done nothing whatever about small savings. He should have arranged that from now on Post Office savings should be tied to a price index so that even if prices rise during the next few years the people who put their money into the Post Office will not find their savings eroded by a rising cost of living. I urge that that should be done, and I would urge something else too.
The hon. Member for Croydon, East (Sir H. Williams) pointed out quite rightly that one of the omissions from the Chancellor's speech was any reference whatsoever to post-war credits. Nothing would create greater confidence among working class people regarding small savings than if the Chancellor were to fund post-war credits. I suggest that he should fund them at 2½ per cent. the same rate as Post Office interest, and that we should then have a savings campaign when the Chancellor and the Prime Minister could explain to the people over the radio that they could safely put up their small savings because they could be sure that the interest on them and their eventual repayment value would be as high as when they deposited their money.
The psychological effect of the funding of post-war credits would be electrical. Some hon. Members may not believe that, but I know. I have mixed with my constituents in pubs and clubs, in the street and everywhere, and I know what their reaction would be. One blot on the Budget is that the Chancellor has done nothing whatever about small savings.
It is not enough to socialise the annual increment of cheque money, because I do not believe there will be any effective planning of industry in this country until the commercial banks are nationalised. The biggest blot on the Budget is that the right hon. Gentleman has done nothing whatever to meet the most pressing need of the country today, the redeployment of labour and capital. Both men and factory capacity must be taken away from the less essential industries to the more essential industries.


The more essential industries I would describe as those on export trade and on capital renovation and capital expansion.
Nothing in the Chancellor's Budget does that. He gives certain tax concessions mainly for firms, and leaves to them the choice of what they do with the money that they save. That, indeed, is not even capitalist planning. It is capitalist anarchy. It does nothing whatever by way of diverting workers and factory capacity from less essential to more essential industries which must be expanded and developed if this country is to survive. That is the worst blot on the Budget.
Yet it would be possible for a Socialist Chancellor, if he carried out a Socialist monetary policy, to discriminate most effectively in favour of the essential against the inessential. I have spent a week on a farm in Wiltshire. When my brother-in-law wants to obtain a loan from the Agricultural Mortgage Corporation he has to pay 6 per cent. That is really preposterous. There should be discrimination by banks in favour of industries like farming. The bank managers should know the farmers best. I had a long discussion with the manager of one of the local banks at Malmesbury about this. A Socialist Chancellor will not be able to exercise adequate control over the industries of the country, and he will not be able to carry out what he fondly imagines is Socialist planning unless and until he nationalises the commercial banks.
The commercial banks need to be nationalised. They did extremely well last year, naturally, with dear money. The discretion lies with the banks as to whom they give advances and what they charge. The Chancellor does nothing to direct them. It is true that under the Bank of England Act, 1946, he has theoretical power to issue directions to the Bank, but so far as I know no directions have ever been issued. And the beauty of it is that the commercial banks could be nationalised for nothing at all, at no cost whatsoever to the taxpayer.
The explanation of that is perfectly simple. It may surprise my hon. and right hon. Friends that these commercial banks are not run for the benefit of the shareholders. Some of the shareholders wish that they were. These banks are a focus of capitalist power, that is all. The

shareholders do not count with these banks; they have had a pretty raw deal over the last 30 years.
In 1929 the profits of the big seven London clearing banks touched a maximum of £13.2 million. It has never approached that figure since. In 1937, when there was a re-armament boomlet, the profits were £11.5 million. They have never approached that figure since. Last year they were £10.4 million, an increase from £9.8 million in 1951. The banks enjoyed £600,000 more profit, thanks to the dear money policy, but it is still a good deal less than it was in 1935 or in 1929. The banks are not run for profit; they are run for the accumulation of hidden reserves.
It may surprise some hon. Members to know that the Companies Act, 1948, expressly exonerates banks from any duty to declare what are their real profits, how much they put to depreciation, how much they pay in profits tax and many other things. The late Walter Leaf, who was for a long time chairman of the Westminster Bank, gave the impression to readers of his very delightful books and speeches that commercial banks, so far from being run for the benefit of shareholders, were run for the purpose of seeing how much they could accumulate in hidden reserves. The figures of profit which I have given of £13.2 million in 1929, £11.5 million in 1937, £9.8 million in 1951 and £10.4 million in 1952 were after payment of all charges and taxation, and all transfers to hidden reserve. Goodness knows what profit they really made.
If these banks were nationalised, as I advocate, the Government would be giving the shareholders a most generous deal if they said, "It is true that you had less than £6 million last year and you have had no more than £5½ million most years since 1932, but we will give you in compensation in perpetuity your 1929 figure, namely, £9.7 million." The Government would be treating them very generously indeed. The Government could then take over the banks and, having done so, would become possessed of the banks' assets. That is pretty obvious.
Among the assets of the banks are their investments, which consist pretty well exclusively of Government securities. The Government would become possessed not only of the declared investments but also


of the banks' share of the floating debt, which is in Treasury bills. If one adds together the banks' investments plus their share of the floating debt then in 1951 the figure was, I believe, £2,736 million. Last year it went up, mainly because of the housing finance, to £3,285 million.
However one works it out, the interest on £3,285 million less tax is a good deal more than the £9.7 million which I propose should be paid to the shareholders by way of annual compensation in perpetuity. So, having nationalised the banks and having become possessed of their assets including investments, there would be no sense in the Government paying interest to themselves. What the Government would do would be simply to substitute for these investments and Treasury bills non-interest bearing currency certificates or, in plain English, currency notes not carrying interest; so there would be still the deposits to meet the obligations. The Government would get rid of the investments and there would be actually a saving, because they would save more net interest than they would pay out to the shareholders.
One finds from one end of the country to the other at nearly every inter-section of thoroughfares—in other words, at street corners—three, four or even five branches of these banks. I do not know how many are redundant, but I know that there are far more than are needed to meet the business needs of those who use them. I am told that all of them have been written off the books long ago. They are the hidden reserves about which the late Mr. Leaf wrote so entertainingly. Having nationalised the banks, the Government should sell these redundant branches and use the proceeds for the amortisation of debt.
That is the kind of financial policy which a crisis-ridden country like ours should be following at a time like this. The nationalisation of the banks would not only relieve the taxpayer of the burden of interest, but it would enable the Socialist Chancellor of the Exchequer of 1954 or 1955 to discriminate between industries. It would enable him to say to the farmers, "You shall have a loan cheaply, at 3 per cent. or 4 per cent.," and to the promoters of greyhound racecourses, "You shall pay 6 per cent. or 7 per cent., if you get a loan at all."

One cannot have Socialist planning when it is left to the banks and business men to say at what rates money shall be borrowed and to what use that money shall be put.
I come finally to one important consequence of this policy, and I refer to the local authorities. I would discriminate in this financial way, not only between essential and inessential industries, but also between publicly and privately owned enterprises. I referred to the bridge which we want in Nottingham and on which we shall have to pay 4¼ per cent. Local authorities have housing programmes and other services. I would say that the local authorities shall have their money for social purposes at 3 per cent., and business people shall have their money for private purposes at some other figure to be arranged. I would discriminate between family concerns in which the principals take a real risk and in fact participate, and the joint stock companies owned by absentee shareholders.
What the Chancellor has done has been to budget for what I call a gamblers' surplus above the line, with no surplus at all below the line. That means that he is putting an end altogether to the system whereby the Local Loans Fund is fed with money out of the Consolidated Fund, that is to say money raised by direct taxation. So far as I understood what he said this afternoon, if he is not doing that he is certainly budgeting for no surplus below the line.
That being so, there will be no taxpayers' contribution to the Local Loans Fund. The Government will have to go on borrowing from the banks for what it lends to local authorities, and will have to pay the banks two and three-eighths per cent. for mere creations of credit, which the banks will have brought into existence out of nothing by bookkeeping entries. Really, the whole thing is absolutely monstrous. It is time that this House became the sovereign authority of finance in the country.
I have thought in terms of revolutionary construction for the last 46 years. I still think in those terms. I still look upon the age in which we live as an age of tremendous opportunity, if only we will grasp it. We have got to put behind us these mid-Victorian ideas which the Chancellor of the Exchequer,


speaking like a university don, enunciated so cold bloodedly this afternoon. We have got to think in terms of the nation's credit being used for the nation's industry. We have to think in terms of Socialist control and Socialist development of this country, and not of the fantastic attempt to bolster up a decaying capitalism, which is the real motive for the Chancellor's Budget.

7.2 p.m.

Mr. Robert Crouch: I know that the hon. Member for Nottingham, South (Mr. Norman Smith) will forgive me if I do not follow every line of argument that he has put forward, but there is one point on which he touched and to which I should like to refer. He mentioned that he had been to the delightful county of Wiltshire during the weekend and that his brother-in-law had told him that he was paying 6 per cent. interest on the money that he had borrowed from the Agricultural Mortgage Corporation. He should have said that that 6 per cent. was not only the interest but was also the repayment of the capital over a period of years, whether it be 20, 40 or 60 years.
I should first of all like to congratulate my right hon. Friend the Chancellor on his Budget. It is the type of Budget which my friends and I who have worked for six or seven years to bring a Conservative Government into office expected a Conservative Chancellor to introduce. In my opinion, this is the first occasion since the war when any serious attempt has been made to stabilise the cost of living. I feel that that is what this Budget will do. Some of the reliefs which my right hon. Friend has announced may not appear in the price indices, but what ordinary people are interested in is how much further their money will go in a few months' time. I feel sure that as the result of this Budget the people's money will go further than it has done for a considerable time.

Lieut.-Colonel Lipton: No.

Mr. Crouch: The hon. and gallant Gentleman says "No," but tax concessions amounting to something like £160 million are bound to bring benefits to the ordinary people. In the last few years, by Questions and in interviews, I have tried to impress upon successive Chancellors the hardship that has been caused in the rural areas by the tax upon the

wireless dry battery, and I can assure my right hon. Friend that this concession will be highly appreciated.
The Chancellor's announcement on sugar means that the country people will be able to preserve a great deal of fruit which they have been unable to do for several years. With all respect to the canners of fruit, both English and that which we import, there is nothing more delicious and acceptable to the country people than home preserved fruit, whether it be in the form of jam or put into a bottle. I am sure that the people who really love the fruit which is produced in this country will very much appreciate this concession.

Lieut.-Colonel Lipton: Nonsense.

Mr. Crouch: The hon. and gallant Gentleman says "Nonsense"; if he likes, one day I will bring him a jar of homemade jam.
Another concession which I have been advocating and which will be appreciated is the substantial allowance for the purchase of new plant and machinery, as a result of which the farming community will be able to check their ever increasing costs of production. I am sorry, however, that the Chancellor has not heeded the other suggestion which I have made in this connection, and that is to give an initial allowance for the reclamation of marginal land.
We have something like 17 million acres of rough grazing in this country. If a similar form of allowance were given to those men who have the pluck to reclaim land for the production mainly of livestock, we should in a matter of 10 years double the amount of livestock that we have at the moment. I hope the Chancellor in the next 12 months will seriously consider extending this allowance to the reclamation of land which at the moment is only rough grazing, bearing in mind that meat is in short supply and is so important.
The country will be not only pleased but interested in the very ingenious way in which the Chancellor has reduced Purchase Tax on so many commodities. I know that traders up and down the country have been concerned about what steps should be taken when Purchase Tax was removed, and by this gradual reduction my right hon. Friend has not left the traders with an undue burden to carry.


Probably as time goes on we shall find that Purchase Tax will be reduced in this gradual fashion when successive Budgets are introduced by our party.
I am sure that the taxi drivers will appreciate the Chancellor's announcement of the method by which he is going to give them some relief, which will enable them to earn a better living than they have been able to earn for some months past. [Interruption.] The hon. and gallant Member for Brixton (Lieut.-Colonel Lipton) seems very dissatisfied, but he has no real ground for complaint.
The concession which has been given to those people with small incomes by raising the income limit from £500 to £600 a year will bring relief and assistance to a great number of people. In making the concession of 6d. in the £ in respect of Income Tax at the various levels, the Chancellor has seen that relief will be given to those in the lower income groups as well as those in the medium and higher income groups.

7.10 p.m.

Mr. Ellis Smith: There is a growing appreciation of the very fine work which is being done by the Central Statistical Office, and it is time that that fact was placed on record in the House of Commons. It is generally recognised that we are in a very serious economic position, and if we are to understand that position clearly it is necessary that we should have more statistical information of the character which is now being published in increasing amounts and which may be obtained at the Vote Office and examined by hon. Members.
I also want to place on record my regret that the Government have not changed the procedure in respect of this Budget debate. When the Labour Government introduced this procedure I was against it and, as the years roll by, I have become convinced that what we are doing is fundamentally wrong. In effect, the Chancellor said that he did not intend to go through that voluminous document—the Economic Survey. I quite appreciate his point of view. If I were to devote the attention he devoted to the many issues with which he dealt—ranging over the many changes which have taken place and the differences of opinion about what should have been done—I would need a whole week.
In my view another week should be given, at the most opportune time, to a debate on the Economic Survey. So that the House could make its contribution to the development of public opinion a week should be allocated to focusing attention directly on the issues which have been raised by the Chancellor this afternoon, and another week to focusing attention on the economic situation. I hope that consideration will be given to that point between now and the end of the next financial year.
The Chancellor said that it was his desire to launch a drive to let the world see that we mean to increase our exports. Later, he said that exports are our paramount need and that we must give a fillip to production. He also said that he proposed to give Income Tax relief, and that the main purpose of this was to encourage expenditure on capital equipment. I wish this Chamber was packed at the moment. If it were I would ask whether there were any hon. or right hon. Members who considered that this limited change would encourage industry to put more into capital equipment. If any hon. Member thinks that it will I can very quickly produce statistical evidence to show what has taken place in the past.
Doctor Meier, of the United States of America, recently made the following statement:
Basic research carried out by Britain constitutes a free gift to the rest of the industrialised world.
During the war we led the world in the development of scientific ideas. Why are we not doing it now? Why are we not manufacturing Terylene? There is a huge world market for it. Why are we not seizing this opportunity, in view of the fact that the Chancellor says that our paramount need is for more exports? Why is Terylene, under another name, being made in huge quantities in the United States of America? Is it correct that in 1951 there was a fall of 3 per cent. in the number of full-time students of technology in our universities? Is it correct that in the United States of America the proportion of applied scientists to fundamental scientists is eight to one while in this country it is only three to one?
If these are the facts—and I appeal to anyone to check these statements if he has any doubts about them—what is the


use of talking about exports being paramount? There are many reasons why these are the facts, but there are three main ones. The first is that in Britain, the further one gets from productive industry the better off one is. Secondly, we are indulging in economic madness by economising at the expense of the development of scientific research and, thirdly, we are starving industry of risk capital.
During the war it was my privilege to go to the War Office on two occasions. The first time I went the interview was arranged by Lord Margesson, who was then Secretary of State for War. I went there to appeal to the General Staff to consider the use of a secret weapon. When I arrived I found, seated round a table, generals with rows and rows of ribbons on their chests and spurs on their boots. I came away from that interview broken-hearted, because I felt that if those men were to be left in charge we should lose the war.
Time rolled on. This weapon was improved by one of our largest industrial establishments and, as a result of the action of the Foreign Secretary—whom we all regret to see in his present state; especially those of us who know so well that he has not just rolled with the stream—I went to the War Office a second time. The right hon. Gentleman was then Secretary of State for War. I went to the same room and the same table, but there were new men round it. It was a treat to talk to them. As soon as the conversation began I could see that they grasped what was at stake. I came away full of hope because General Weeks and General King—the new men in charge of mechanisation—had understood what had been put before them.
Those generals had a twentieth century outlook, whereas the men I met on the first occasion had an eighteenth or nineteenth century outlook. That experience applies equally to our present economic situation. Too many people in high places are still approaching our economic problems with an eighteenth or nineteenth century outlook, whereas the world is moving at a quicker rate than it has ever done in history, and we are now in the mid-twentieth century, which demands twentieth century ideals.
I believe that, just as during the first 12 months of the war we drifted, so

we are now drifting in our economic situation. Our people are fighting an economic rearguard action leading to a losing war unless a fundamental change is brought about. We are spending millions of pounds on military plans, but hardly a penny on economic plans. Thousands are engaged in working out military strategy, but very few are engaged in working out our economic strategy. There is a huge general military staff in London and Paris, but we have little, if any, economic staff in our own country.
Almost every country in the world, except Conservative Britain, has introduced some form of economic planning and state organisation, and that applies in more quarters than one. If the hon. Member for Kidderminster (Mr. Nabarro) differs from me, let him say so openly. I believe in cut-and-thrust; that is the way we bring things up.

Mr. Nabarro: The hon. Gentleman omitted the world's greatest industrial power. The United States of America has not introduced centralised planning on the best Socialist model. The reason for the greater rate of production of the United States is that they believe in the very antithesis of centralised direction.

Mr. Smith: I have no time to go into that this evening. The hon. Member for Kidderminster should not swing his arms; let us keep to the point. The more up-to-date of us know that we are living in the twentieth century, and we ought not to adopt ideas which were prevalent in the House in the seventeenth and eighteenth centuries, of which we saw concrete evidence this afternoon.
The Economic Survey states, on page 51:
The driving force behind our export expansion can come only from industry….
I understand that that is what the hon. Member for Kidderminster believes. Did he get that? Let me repeat it:
The driving force behind our export expansion can come only from industry….
I differ fundamentally from that. It represents the outlook of the War Office with generals wearing medals and spurs. We need generals of the twentieth century to deal with our economic plans.
The driving force to win the war came from the Government, supported by this House, and the enlightened opinion of


most of our fellow countrymen. The same policy needs to be applied to our economic problems. Since 1938 our industries have had a great record. Since 1945 our output has been the admiration of the world. Yet newspapers like the "Manchester Guardian" write articles such as that to which I am about to refer, and they are justified in doing so. On 20th March the Chancellor of the Exchequer came back from America and addressed a large conference in, if I remember correctly, the Friends Meeting House. He appealed for increased productivity and increased exports. The "Manchester Guardian" headed its article "Action or Talk." We have had speeches and speeches galore since 1945 by people in high places in all quarters.
The time has come when we need not speeches but action based upon concrete proposals to deal with our problems. The country is getting cynical and saying, "More talk, more talk, yah, yah, yah, but no action." We require action of the same kind which gave our country a fillip and brought about a great change when our people responded to our warnings after 12 months of war. This country now urgently requires a twentieth century technological revolution.
I suggest, first of all, the abolition of the Ministry of Materials. I suggest, secondly, the setting up in its place of a Ministry of Production—let hon. Gentlemen "Hear, hear" that—with a national plan and a planning commission. I know we shall have difficulties with certain high places in the Civil Service about a planning commission, but if this country is to deal with its problems, people who stand in the way of the national interest should be dealt with as they are in workshops and other places.
I plead for a constructive economic policy based upon the principles which I have outlined, together with a programme of action based on a wealth production policy. This will rally our country and create an interest such as has not been seen for a few years. There should be a condition that any increase in output will be used not to benefit individuals but in the nation's interest. This policy should be applied at home, and at the next Commonwealth Conference similar proposals should be put before the whole

Commonwealth. We need a commonwealth economic development loan. We need a special compulsory savings scheme applied to all who are receiving above £500 a year. If there are people who are against that, I ask them how they will deal with the problems which confront us and how they propose to raise special risk capital, with which I shall deal later.
I believe that this country urgently requires more horse-power per head. There is a great tendency still in this country to take it out of the energy of the people instead of out of the machines and instead of applying twentieth century ideals and organisation. We need more manpower in productive industry. There are too many in this country watching too few do the work. We require modernisation of fixed capital and organisation. We need more incentive priorities for all those engaged in productive effort.
I ask the Government to consider the next constructive proposal which I shall make. During the consideration which the Macmillan Commission gave to our problems of finance and industry, it was my privilege to be friendly with one or two of its members. I refer in particular to Ernest Bevin, who made a very great contribution, as the rest of the Commission will admit, and he and another member signed a minority Report which is well worth reading to this day.
We need a similar Royal Commission to consider similar problems, for, measured by twentieth century standards, our industry is being starved of capital, and of risk capital in particular. The Conservatives and all those who acquiesced in the situation were responsible for starving many of our people, particularly those in the industrial areas, between the two wars. Miners were then receiving an average of 28s. for a full week's work in some areas, and their wives and children went short and suffered from malnutrition.
Those people saw their children and other people's children going short of necessities and suffering from malnutrition. In just the same way this Government are now responsible for a policy of malnutrition in industry, which is being starved of capital. Just as our people felt the economic lash for years, so industry will feel the effects of this lash in years to come. We shall never hold our own unless we have a fundamental


change in economic policy. I plead, therefore, for a Royal Commission to be set up to consider this matter.
This country has given recognition in Honours Lists and in many other ways in the past to too many speculators, financiers and sycophants of all kinds. I plead that credit should be given where credit is due. I will mention two who deserve it. A friend of mine, whose name is John Ellis, and Mr. Richard Taylor worked for years practically day and night. Their wives hardly saw them. I said that they were working too hard and would never stick to it, but, inspired by others whose confidence they won, they developed at Trafford Park, Manchester, at Taylor Brothers, the finest plant of its kind in the world which, in five minutes, can change raw steel blocks to finished locomotive wheels.
I am sorry that certain hon. Members who speak so much about another country have gone out. It owes us much for the part we played in two world wars. It is not in that country but at Trafford Park, Manchester, that the world is led in this particular form of engineering. That machine, which cost £1 million, is operated by 11 men wearing white coats. How many concerns can afford to lay out £1 million risk capital?
We have in this country some of the finest engineers and scientists in the world. Some of the finest men in the world are prepared to work night and day to experiment with new ideas and seek new advances in technology, but they are not being given the incentives and the encouragement they ought to be given, and unless there is a fundamental change of policy the country will suffer. The Comet was not built with talk. It was not built by certain people in high places in London who wield too much influence behind the scenes. The Comet was built because men worked for years, night and day, to give practical expression to scientific ideas, to translate plans on the drawing board into constructional achievement.
What was done in the case of the Comet is being done with the Delta in A. V. Roe's works. Instead of capturing the world's markets, we hand it over to the Americans. We are doing that with radar and new forms of traction. Our engineers and scientists, who are among the finest

in the world, are being starved of risk capital. They are not being given the chances they ought to have. The Chancellor says that exports are paramount, yet he cuts expenditure on the development of scientific research. Does not the Economic Secretary understand that?

The Economic Secretary to the Treasury (Mr. R. Maudling): I did not quite understand the point of the hon. Gentleman's last sentence.

Mr. Smith: I said that the Government have reduced expenditure on the Department of Scientific and Industrial Research. I think that is a tragedy. It is not only directly harmful, but indirectly also, because it has a discouraging effect on people supporting industrial research. There ought to be an enormous increase of expenditure on industrial research and more encouragement given to engineers to work out new forms of engineering.
Having spent 18 years in this House I know what it means to try to get ideas accepted. I shall never forget the late Miss Rathbone, a great old soul, who said that in this country one had to put forward an idea for 25 years if one hoped to have it accepted. Such leisurely consideration of new ideas may have been good enough in the old days; it may have been good enough in the days of the Zulu wars and the Boer War; but it will not do in these times. We are living in a new scientific age. Man can nearly control nature. This country has led the world in the development of some ideas. Our scientists and engineers are admired throughout the world. Similar men in Russia and America and China and elsewhere in Asia all look to this country to give them a lead; but we ourselves are. not getting the best out of our own successes in technology for the benefit of our own economy.
I hope that the Economic Secretary will raise this matter with his colleagues so that this Government, even within their limits, will follow a constructive policy. We bless our forefathers for the legacy of democratic rights they handed down to us, and for our standard of living. We also must take action to achieve-results that we can hand down as a legacy to those yet to come and for which they will have cause to bless us. We must do that, and not go on drifting as we are.

7.38 p.m.

Professor Sir Douglas Savory: I have listened with the greatest possible interest to the speech of the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), and I certainly agree with him very strongly—I should not be an ex-university Member if I did not—on the necessity for scientific research. I agree with him that that is very important, and that very great attention should be paid to it.
I must apologise for detaining the Committee, but I have found from experience that unless I catch the eye of the Chair on the first night of the Budget debate I do not get a chance to take part in the discussion. I therefore take this opportunity of saying what I have very much on my mind. First, I should like to congratulate very heartily the Chancellor of the Exchequer on a very brilliant speech. It has been my lot to hear a good many Budget speeches. I am sure that because of its logic, its lucidity, its persuasiveness and comprehension, and also for its beautiful English and the delightful pronunciation with which it was delivered, we all listened to it with the utmost pleasure.
It was a very agreeable surprise to me, after addressing the large annual meeting of my constituents in South Antrim last Saturday afternoon at which I refused to hold out any hope of a remission of taxation. I looked at these terrific figures, of £581 million for the Army Estimates, £364 million for the Navy Estimates, and £548 million for the Air Estimates, and I pointed out to my constituents that the necessities of defence are absorbing one-third of our total revenue, and I did not hold out any hope of any tax remission. Therefore, when I heard today that very gratifying changes were being made, first in Purchase Tax and then the remission of 6d. in Income Tax, I frankly admit that it came as a very agreeable surprise.
If there is to be a remission of taxations, I feel very strongly that we should consider a small but deserving class, which perhaps does not carry with it many votes at elections. It is a class which, to my mind, is bearing a very unfair burden of taxation, and that is the Surtax payers. Even with this remission of 6d. the Surtax payer will be paying up to 19s. in the £. The result is often disastrous.
We are now doing everything we can to attract American guests, who bring dollars into the country. When they come here for the Coronation they will afterwards visit our cathedrals and country houses. These country houses are perhaps one of our greatest possible assets and it is heartbreaking to see that, on account of this stupendous taxation, it is becoming less and less possible to maintain them.
It is very sad, when one of these country houses has to close down, to see the effect on the surrounding villages. The benevolent householder is forced to depart and there is unemployment. Only the other day I was going over an estate which, in the old days, had 15 gardeners for the maintenance of a very beautiful tropical garden which was an attraction for the whole country. On account of the Death Duties and of very high taxation they had to reduce the staff to a man and a boy, with the consequence that those gardens could no longer be maintained with their marvellous collection of tropical plants, which one could scarcely believe it possible could be grown in Ireland, but where, owing to the mildness and beauty of the climate, they had been preserved.
When the enormous sum of £131 million obtained from Surtax is combined with the £151 million obtained from Death Duties, the figure is astronomical. It is one which would not have been thought credible a few years ago, at a time when our whole Budget was no more than £100 million. I remember my father telling me that in 1874, when Income Tax was 2d. in the £, at the General Election, Mr. Gladstone promised that if he were returned to power that 2d. in the £ Income Tax would be abolished.
I do not know how many other hon. Members recollect the famous Budget introduced by Sir William Harcourt, in 1894, when I was sitting under the clock in the old House of Commons, and, for the first time, heard of the application of Death Duties to landed estates. That was the beginning of this taxation. But "facilis descensus Averno." Curiously enough, shortly after Sir William Harcourt had introduced these Death Duties and applied them to landed estates, he succeeded to a beautiful property near Oxford, and was hoist with his own petard by having to pay the Death Duties


which he had for the first time applied to landed estates.
Those Death Duties have now increased to such an amazing extent that it is impossible to keep up these beautiful country houses. Everyone knows that they are being closed down or are falling into ruin. I remember raising this question with the Chancellor and asking whether it was still possible, as it used to be in the old days, to insure against Death Duties, and he replied that in view of OUT enormous Income Tax and Surtax, insurance against Death Duties was now out of the question. Now, that is a very, very serious thing, that these Death Duties should be imposed on estates and that one cannot insure against them for the sake of one's family. Further, it is a disastrous policy that the sons and daughters, the nearest heirs, should pay the same Death Duties as distant relatives. I do not think there is any other country in the world where that applies. In France, a very great distinction is made between the nearest heir and the distant relative who inherits the property. At present, we do not make any distinction between the two, and it is a very great hardship if the children are handicapped to the same extent as some very distant heir.
When Philip Kerr inherited the title of Marquess of Lothian, together with that beautiful property in Norfolk, he wrote a letter to "The Times," in which he said that he was asked to pay Death Duties on that Norfolk estate to the amount of £200,000, but there were absolutely no assets. He asked the Exchequer to take over some of the land, but they were not able to do so at that time, so that there was nothing left but to sell those pictures and that marvellous, almost unique library which is now to be found in America.
Today, I looked up to the gallery and missed a very familiar face during the Budget speech—the face of our very distinguished Minister of Finance for Northern Ireland, Major Sinclair. He was always in the Distinguished Strangers' Gallery, listening to the Budget statement. Unhappily, like our beloved colleague, Sir Walter Smiles, he was a victim of that terrible disaster of the "Princess Victoria," which foundered a few weeks ago off the Irish coast. He was a very great financier, and no matter what party was in power here on this side

of the water, he always co-operated with great cordiality with the Chancellor of the Exchequer. My right hon. Friend, in a very fine tribute which he wrote in "The Times," pointed out that Major Sinclair had given him a great deal of assistance, that he had an extensive knowledge of finance and had a very great brain.
As poor Major Sinclair is no more, I should like to point out one of the matters on which he laid great stress when introducing his last Budget into the House of Commons of Northern Ireland, namely, the effect that Death Duties are having at present on family businesses. Many of these small businesses in Northern Ireland have been built up by individuals, by families who have shown the necessary enterprise and founded various branches of the linen industry, built up a large rope manufacture and a very important tobacco factory.
These families find that when the senior partner dies the effect on the business is very serious because they have to part with a great part of the capital. This makes it impossible for them to extend their manufactures as they would like to do and even to maintain them. In fact, they find that the Death Duties are crippling. Nobody developed this point with greater eloquence than the late Major Sinclair. I would very strongly urge on the representative of the Treasury that some thought should be given, if not in this Budget—because I am sure that all the concessions have been made that can now be made—then in future Budgets to this matter of Death Duties affecting family businesses.
To sum up my brief points, I would say that some consideration should be given to the very deserving class which is now undergoing not merely taxation but confiscation; and that we should consider the effect which Death Duties are having on the value of the assets of the country, such as those beautiful, country houses which are not found anywhere else in the world.

7.51 p.m.

Mr. Hector Hughes: The hon. Member for Antrim, South (Sir D. Savory) praised the Chancellor's charming diction, his choice of language and his eloquent manner, but he said little about the Budget. He also


spoke about English country houses and about the lamentable wreck of the "Princess Victoria," but still he said very little about the Budget. He reminded me of the distinguished critic who was asked to look at a modern picture, and who said "The frame is indeed very elegant"—nothing about the picture itself. His silence was sufficient condemnation of the picture, just as the inadequate words used by the previous speaker are sufficient condemnation of the Chancellor's Budget.
The speech to which we have just listened contained some general expressions of opinion. It contained some uncritical adulation of the Chancellor, but it contained no analytical examination of the Chancellor's proposals. I invite the House to consider those proposals in the perspective of the economic environment in which we find ourselves. The Chancellor of the Exchequer dealt with the Economic Survey of 1953 and his Budget proposals together. In doing this he followed the example of previous Labour Chancellors of the Exchequer but not with equal success.
There was not in the present Chancellor's speech any initiative, courage or leadership such as we found in the speeches of such Chancellors as the late Sir Stafford Cripps. The reasons for the failure of the present Chancellor arise from his lack of vision in his former Budget, his unsound estimates last year, the mistakes in his forecasts, which indeed he admitted today, the removal of food subsidies during the last year and generally to the bad administration of the present Government.
This has resulted in what the Chancellor of the Exchequer today euphemistically called the "lull in our production." What a euphemistic expression for the lack of production which has characterised the last year. He talked about our "export difficulties." The real descriptions of these things are national deterioration; diminished employment by 96,000, meaning that nearly 100,000 families are without their pay packet; increased short-time working, pushing countless families beneath the line of normality; falling productivity by 4½ per cent., which means national impoverishment; higher cost of living by 23 per cent., which means penury and hardship for hundreds of thousands of people in

this country; diminished imports, which are down by £35 million; and diminished exports which are down by £3½ million.
The stark fact is that under the Labour Government from 1945 to 1951 there was a steady rise in production and in exports and imports, while under this Tory Government, in one year, there has been a fall in each of these. The Chancellor's failure is due, therefore, not only to the manner of his presentation, which has been so praised by the previous speaker, and which, I concede, was mild and gentle and eloquent and elegant but by no means persuasive, but to the unhappy situation which has been created by the present Government's ineptitude and class bias. These grave matters are relevant to the fact that we are discussing not only the Budget proposals but the Economic Survey and its background.
This makes it possible to point to the terrible contrast between three periods—the inter-war years of decadence and deterioration, the six post-war years of construction, reconstruction and renaissance, and the last bad year of relapse which has reversed our upward trend. The present Chancellor's melancholy speech today gives the impression of his having reversed the engine and the national chariot is rushing down-hill towards the dreadful inter-war conditions.
I fear that this downward tendency is a fact and is due to the principles of Government which are now being applied and which are converting our national fortunes into national misfortunes. During the inter-war years, as now, there were cuts in the social services, penalties on education, heavy taxation of the lower income groups, deterioration in national health, high infant and maternal mortality and other evils, while from 1945 onwards all this was reversed, full employment became the order of the day, social services were expanded, education was fostered, lower incomes were freed from Income Tax, national health improved, infant and maternal mortality fell by 9 per cent. and old age pensions were increased.
From 1945 to 1950 this spectacular and beneficial development went on. It is indeed relevant to remind the House that as early as October, 1948, Mr. Paul G. Hoffman, the Administrator of the European Recovery Programme said that he had been impressed with the remark-


able progress made by Britain in making good her pledge of self-help. I quote him as saying:
When I took this job in April, 1948, it seemed to me that the goals which Britain had set herself in the first year were quite unattainable.…I must admit that the progress that has been made dispels all my doubts. The very gallant and successful fight which Great Britain has put up to build up her exports and hold down imports, and thus achieve financial stability, is one which commands the admiration of the world. I am also impressed by the determination, which is very evident, that the progress made so far is just the beginning.
He was right. It was just the beginning and it continued as long as the Labour Government continued. It continued until the present Government got its chance to divert the national fortunes into less prosperous directions.
During this period, the Labour Government, with great sincerity, skill and courage, mastered the transition from war to peace, reached the period of national recovery and simultaneously developed the Welfare State. In 1950 Sir Stafford Cripps, as Chancellor of the Exchequer, achieved the miracle of balancing our economy, not only as far as our foreign account was concerned but also in our internal finances. Further, in 1950 Sir Stafford Cripps achieved an approximate balance between supply and demand, escaped from the threat of serious inflation in our system and achieved a valuable degree of disinflation. By 1950 our economic system had got beyond the disturbance of temporary post-war factors and had settled down to favourable conditions of full employment, record productivity and record exports.
Four authoritative tests were applied to all European countries, including Britain, affected by World War II. It was then found that, compared with other such countries, Britain, first, had travelled furthest on the road towards economic recovery; secondly, had done most to reduce imports and increased exports; thirdly, was least dependent on American aid; and fourthly, had the highest rate of production per man.
It will be remembered that the right hon. Member for Woodford (Mr. Churchill), as he then was, now the Prime Minister, about that time called the workers of this country "workshies" and in 1944, before the General Election of 1945, at a time when he thought he would have the responsibility of administering

the post-war fortunes of this country, he said, "The day the war ends Britain will be bankrupt." That was in 1944, but, happily, in 1945 Labour came into office and this country was not bankrupt but became resurgent.
Then came the General Election of 1951 which brought disaster to this nation, brought a new Chancellor of the Exchequer—the present Chancellor—with his reactionary ideas, who reversed the engines of national progress, who whittled down the Welfare State and reduced its benefits. Last year, he introduced a class Budget which hurt most those whose incomes were under £500 a year; hurt married people more than single and thereby tended to penalise marriage; favoured the people with higher incomes; and favoured most of all those with incomes of £2,500 a year upwards.
In addition to that, he penalised the poorer families in another way—he raised the bank rate of interest on loans. This had a deadening effect on our whole economc system. It increased costs to local authorities, it increased the cost of housing, transport, light, heat and education. It increased costs to shopkeepers and in that way to consumers also and it raised mortgage rates and thereby made the setting up of a home more difficult.
The results of this policy have been very bad. They show how the Government broke their election promises. They promised to reduce the cost of living, but, as I have said, they increased it by 23 per cent. They promised better conditions for the poor but they presented a rich man's Budget. They promised national economies, but, as the Chancellor admitted today, expenditure has increased by millions of pounds. They promised cheaper food, but food is now dearer by 23 per cent. That which cost £1 17s. 11d. in January, 1952, now costs £2 6s. 1d.
They promised more meat and in getting it they sacrificed this country to the Argentine and prejudiced our friends in New Zealand and in Australia. This surrender over meat is a good illustration of how the Government has muddled the national finances, has surrendered our national interests, has sacrificed our Commonwealth friends. It was condemned even by the Conservative Press. The "Sunday Times," a Conservative organ, on 4th January published a feature article by Scrutator entitled "Surrenders to Peron" accusing the Tory Government


of sacrificing the national interest to its own popularity. I should like to quote what Scrutator said about this. Here are his words:
On all the points that matter most we have capitulated to Argentina. Not only are the agreed prices high (much higher than we are paying to New Zealand and Australia) but the forms in which Argentina will accept payment are disadvantageous to us. New Zealand and Australia are great purchasers of our manufactures, and we balance our accounts with them in that way. Argentina under the new agreement will take payment chiefly in primary products—coal and oil. Precious coal which is everywhere in scarce supply, and oil, which means practically dollars, since, even if we do not pay dollars for it, we could buy dollars with it. The Argentines will also take from us some tinplate, but apart from that their import of our manufactures is to be limited to £3 million. Nor are the minor features of the Agreement any better.
Scrutator asks:
Why have we made these surrenders? Argentina was scarcely negotiating from strength. She has been and is in grave economic difficulties, and, if we could do with her meat she no less could do with our custom. There is not another purchaser in the world ready to buy her meat on the scale we will; the very magnitude of our demand should secure good terms for us. Why did it not?
Scrutator, the Tory writer, asks in vain for some explanation of this Tory surrender to the disadvantage of our national finances and the disadvantage of our national friendships with our Dominions beyond the seas. He cannot find an explanation and he continues his castigation of his own Tory Government in this way:
What is the remedy? Not to set up a Peronist dictatorship in Great Britain but to see that on topics of this sort the voter is put wise, and not left to throw his weight blindly. If a reasoned appeal had been made to the British people to stand firm against Argentine pressure, who doubts that it would have been heard? But none was made, and no guidance has been given. How many of us, for example, have been led to realise the extraordinary services which the two million New Zealanders have rendered to the food supply of 50 million Britons? It is to Australia and New Zealand that we must look in the future for our main supplies; and the sooner our policy conforms to that outlook the better. We have less than nothing to gain by heaping concessions on Peronist Argentina. The regime's policy towards Britain and British subjects has been a succession of pinpricks varied by gross and serious injustices. The return we now make for such treatment is (to say the least) not calculated to deter other countries from treating us likewise.
The fact is that this Tory Government has made Britain the whipping boy of

the world, has tended to alienate our colleagues in the British Commonwealth of Nations, has mismanaged our Colonies, has undermined our national sovereignty; and this Budget will make these misfortunes worse. It is no wonder that there is a vast gap between the promises of the Government and their performance. Last year the Chancellor planned for a Budget surplus of £510 million, but today it turns out that the Budget surplus is only £88 million—£422 million short. When Labour were in power the five surpluses were, £625 million, £831 million, £543 million, £720 million, and £366 million. Here was no miserable miscalculations, no shameful shortage, no dreadful deficit, but surplus according to plan.
I will draw the attention of the Committee to two other financial mistakes, or whatever we may call them, during the last year which have greatly affected our national economy and the national budget. One was that the Government promised cheaper clothes. They have not kept that promise. What does the Chancellor say about that? The other was one very prejudicial to my constituency of Aberdeen. There we not only catch and sell fish with great success, but we also make ships and agricultural implements with equal success. For those purposes we need steel.
The Prime Minister went to America to arrange for supplies of steel, but the results were not productive of steel. They were more productive of postprandial promises. The results for these industries depending on steel have been very poor. They have restricted our production at home, they have increased unemployment, they have diminished our national export and income and cut down our shipbuilding.
I cannot put this better than it was put by Mr. Charles Connell, the President of the Shipbuilding Conference, as reported in Lloyd's List and Shipping Gazette of 1st January, 1953. He said:
British shipyards have just finished a year which has been full of difficulty and frustration despite an all-time record order book. The unsatisfactory position is solely attributable to the steel shortage which has seriously hampered the efforts of shipbuilders to overtake the huge order book expeditiously and in consequence economically. Putting statistical refinements on one side, the striking fact which emerges is that with orders, the facilities and the manpower to achieve an annual output


of 1¾ million tons gross, the steel shortage has geared down the industries activity in 1952 to an output which falls short of that figure by half a million tons.
An adequate supply of steel would bring the much desired increased tempo of production and would go a long way to reduce costs and speed deliveries, bearing in mind that the shipyards in the United Kingdom are thoroughly up to date having been modernised since the end of the war at a cost of many millions of pound?.
I can tell the Government that the industrious and skilful workers of Aberdeen, and the employers of Aberdeen also, condemn this disgraceful ineptitude which has allowed these wasteful conditions to develop, especially after a period of five years full employment.
This state of affairs has pressed hardly on all citizens. Those with variable incomes have sought increases and got them in many cases. Those with fixed incomes have been unable to get this relief and all kinds of pensioners are now suffering, notably old age pensioners, Forces pensioners, Civil Service pensioners, yet the Chancellor today provides them with no relief. We have only to read "The Times" newspaper to see the authoritative letter signed by many distinguished persons pleading for better conditions for those who have fixed salaries and have no relief, namely, civil servants.
When considering the Budget proposals it should be remembered that these classes of people were the wealth producers of yesterday and the heroes who fought in our wars. The increased cost of living eats like a canker into their fixed incomes and diminishes their access to the good things of life, to which they are as much entitled as the richer citizens of this island. Does the Chancellor realise this? What is he doing about it? His answer is to produce a rich man's budget. This is his unrelenting answer, but I can tell him that the workers of this country will not stand that kind of thing.
This time last year the Chancellor of the Exchequer told the Committee that he expected to achieve a general balance of revenue and expenditure; he has failed in this. He estimated that expenditure Would fall; he was wrong in that. He estimated that revenue would rise; he was wrong in that. His estimates have proved utterly wrong in all these important matters. Also, his forecast of receipts and expenditure proved wrong. Receipts from Excise, receipts from Income Tax,

from Profits Tax and death duties are all less than he expected. Expenditure is more than he bargained for.
The final results of the year compare most unfavourably with a year ago, or with any years of the Labour Government. The outstanding features are that a year ago the surplus of ordinary revenue and expenditure was £380 million; today it is only £88 million. The second point is that revenue is £230 million less than was forecast and supplementary estimates have added £200 million to expenditure. This is astonishing in view of the savings which the Chancellor promised to effect by cutting subsidies during the year.
The Chancellor, in struggling with his adversity, gives the impression that he does not expect to remain long in office; he does not choose to take a long view. It may well be that he expects a General Election in the autumn. It may well be that he will get what is coming to him at that General Election and this uneconomic Government will then go out of office to the advantage of the country. It may be because last year his view was so myopic that he could not see far, it may be that because last year his view was so astigmatic that he could not see correctly.
Certainly he admits he did not see correctly and his estimates were wrong. This year he has done no better. Whether it is defective vision, or courage, or perception, he has not solved the problems which it is his duty to solve. He has not eased the burden on the old, or the poor, or the pensioners. He has not provided full employment, or full productivity, or expanding exports. He has not done any of these things.
The office of Chancellor is a great and powerful office. He can affect the lives of millions of people for good or ill. He can bring happiness to families or deprive them of it and can wreck their lives. This time millions of people hoped that he would use his power benevolently, as the Labour Government did, to encourage employment, productivity and exports and to maintain, develop the Welfare State and keep down prices and the cost of living. The poor pensioners, the old age pensioners, Forces pensioners and people with fixed incomes have looked to him for bread and he gave them a stone. He has spurned their legitimate hopes and


coldly passed by on the other side, turning away his head from them in their undeserved distress. I hope the Committee will agree with me that this is a thoroughly bad Budget and bad for the national economy.

8.20 p.m.

Mr. Ronald Russell: When I decided to try to catch your eye tonight, Sir Charles, I intended to be exceedingly brief. I still hope that I shall be very brief, judged by the general standard of the length of speeches in this Committee, but as I sat listening to speeches made by hon. Members opposite I heard so many statements with which I disagreed most violently that I must take up a little time in answering some of them.
The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) complained that my right hon. Friend had been guilty of a mistake a year ago in his forecast of the surplus, which had not turned out so great as he had thought. That is a very minor mistake compared with the one made by his predecessor two years ago, which ended in this country nearly being bankrupt as a result of the fall in the gold and dollar reserves which took place in the latter half of 1951, and which the late Government did nothing to try to prevent or, if they did try, were wholely unsuccessful in preventing. It is thanks to the policy which has been pursued by the Chancellor that we have rescued the country from that situation. The mistake which my right hon. Friend has today been accused of having made a year ago in his forecast of the surplus this year is far outweighed by the appalling mistakes made by the Labour Government before they left office.
Then the hon. and learned Gentleman indulged in a story of the inter-war years with which I would not weary the Committee at this moment if it was not to correct a misstatement. I wish I had come here armed with all kinds of text books to enable me to find the accurate answers to some of the statements which the hon. and learned Member has made. He said that there had been cuts in the social services in the inter-war years. That in itself is quite correct, but most of the cuts which had to be made by the National Government of 1931–39 were eventually restored long before the war,

the coming of which altered the whole position.
As for the high infantile mortality rate to which the hon. and learned Member referred, I am sure he will agree that, looking back over the years there has been, whatever Government has been in power, a steady fall in both the infantile mortality rate and the maternal mortality rate which has had nothing to do with the politics of the Government in power, but which has been due to the advances made throughout the years by medical science, to which all parties have contributed. These points really have nothing much to do with this Budget, but I felt that I could not let them go unchallenged.
In fact, over the whole period of the inter-war years, the real value of wages rose, I think I am right in saying, by about 9 per cent—between 1924 and 1939. In other words, there was a steady improvement in the conditions of living of the people. Tributes to that have been paid from time to time by many friends of the hon. and learned Member in the past in quoting the value of the increase in the social services, which have been built up by all parties throughout the years.
The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), complained of a lack of economic planning. He quoted, from page 51 of the Economic Survey:
The driving force behind our export expansion can come only from industry,…
Unfortunately, he forgot to finish the sentence, which goes on to say:
but it is the Government's duty to create and maintain economic conditions favourable to such an expansion.
That summarises the difference between the two sides of the Committee on this issue. The hon. Member and his hon. Friends want to plan the whole of our industry and the whole of our economic life. We want to create the conditions under which industry can plan for itself.

Mr. Ellis Smith: The hon. Member is very fair, and is stating his case in a very reasoned way. I hope he is correct, and that, whenever we get the opportunity, we use our power to plan this country in the way we want it.

Mr. Russell: I was not complaining of what the hon. Member said. I was making the point that I am very glad that there is less economic planning at present.


I feel that one of the reasons why we nearly reached national bankruptcy only 18 months ago was because there had been too much economic planning, which had got out of control and failed altogether. I am very glad to see the policy which my right hon. Friend is pursuing of having less economic planning from the centre and of creating the conditions under which industry can plan for itself.
Passing to the details of the Budget, I particularly welcome the reductions in Purchase Tax and the changes of Income Tax, which benefit pretty well the whole mass of our people. I know that there are many people nowadays who do not pay Income Tax, but they will benefit from the reductions in Purchase Tax. Incidentally, I met a constituent of mine last night who complained of the high taxation on overtime earnings. The figures he quoted to me were astonishing. He said that out of 33s. extra which he earned on overtime last week he paid about 32s. in taxation. I do not categorically accept those figures as they stand as—

Mr. E. Fernyhough: They are absolute nonsense.

Mr. Russell: —they may be an exaggeration and my constituent may have made a miscalculation. I think the hon. Member will agree, however, that there is a great deal of high taxation on overtime earnings, which it is my right hon. Friend's desire to reduce.

Mr. Fernyhough: The hon. Member's constituent must have been a Surtax payer.

Mr. Russell: He is not a Surtax payer. I merely make the point that there has been a high rate of taxation on overtime earnings and that it is in the interests of this country, if we are to increase our production, to have that high taxation reduced.
There is only one thing I regret about this Budget, and it is perhaps rather churlish to regret it. I refer to the petrol tax. I have been very sorry to have heard announced, in each of the three previous Budgets to which I have listened as a Member of the House, an increase in the petrol tax. This process was begun by Sir Stafford Cripps, continued by the right hon. Member fox Leeds, South (Mr. Gaitskell) in the Budget two years ago,

and was continued by my right hon. Friend last year. There was more excuse for my right hon. Friend increasing the duty last year than for his predecessors, because the main reason why it was done last year was to assist in solving the balance of payments problem and to try to cut down imports of petrol from dollar sources.
The motoring community and industry, through its transport, pay enormous sums of money in taxation. I would not mind that so much if the money were used to improve the country's road system, which is very poor in relation to the traffic it has to bear. A great saving to industry could be effected were transport speeded up by the provision of a better road system. If London buses could increase their speed by an average of a mile an hour a great financial saving would be effected. Any improvement to the road system in the centre of London would be a most difficult matter, but there is wide scope for improvement in other parts of the country.
I hope, therefore, that as soon as economic conditions allow more money will be allocated to such improvement. In the last 20 years the motoring community and industry have been mulcted of a great deal of money which has not been devoted to the purpose for which it was originally intended.

Mr. Ellis Smith: Who started it?

Mr. Russell: It does not matter who started it. I do not like it and I hope that before long it will be brought to an end.
The Chancellor expressed anxiety about our export trade. We all hope he will give his attention to the question, argued out at the Commonwealth Conference, of the no new preference clause in the General Agreement on Tariffs and Trade. The best way to maintain our export trade, and increase it, is by developing the Commonwealth and Empire and in finding more new markets in those countries.
I wish to see the ending of the no new preference clause in the General Agreement on Tariffs and Trade. I appreciate the difficulties with which the Government were faced at the Commonwealth Conference last autumn, when certain Commonwealth countries resisted their proposal to seek release from this clause


by an approach to the body which controls the Agreement. I hope my right hon. Friend will consider seeking that release unilaterally if we cannot achieve Commonwealth agreement about it. I would remind him that when the present system of Imperial preference was re-introduced into this country 60 years ago it was not done by Commonwealth agreement but by the unilateral action of the Canadians, who themselves introduced preference on goods coming from this country.
Unfortunately, it happens to be the Canadians who are mainly responsible for the difficulty today, but that is just an accident. I hope we shall consider repeating their action of 60 years ago, if we cannot get Commonwealth agreement, and provide an example to the Commonwealth by seeking release ourselves. I would couple that with a plea that we should consider seeking an amendment to the most favoured nation clause which compels us to treat foreign countries on a basis of absolute equality no matter whether they give us reciprocity or not. The relaxation of that clause would help our export trade.
I consider that this is a very fine Budget. It provides an incentive which will help to keep this country on the road on which it started when this Government came into power, and I hope the proposals of my right hon. Friend will be supported by the whole Committee.

8.35 p.m.

Mr. Frederick Lee: I agree with the hon. Member for Wembley, South (Mr. Russell) about the importance of an adequate road system. An inefficient road system can have the most adverse effect on industry, which is one of the reasons why I joined with my colleagues in rejecting the Government's proposals to de-nationalise road transport. I believe it will have a most injurious effect upon British industry, because it will tend to impede the travel facilities which, at the moment, are improving, despite the obsolete nature of much of our road system.
My hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) touched on a point which I should like to hear debated when he asked why it was that

such a purely British invention as Terylene was not developed in this country. I know that my hon. Friend has a mind which likes to delve into these things, and I suggest to him that, if he analyses the effect on the £11 million which has been sunk in nylon production in Britain, if Terylene had been developed too speedily here, he would probably find the answer to his question.
I feel that the Chancellor today missed a great chance. He has produced a Budget which seemed to me, at any rate, more attuned to a party politician with his eye on a General Election in six months' time rather than a statement upon whose decisions at this time the economic future of the nation may well depend. One could perhaps best summarise one's own reactions to the set of principles which guided the right hon. Gentleman in framing his Budget by quoting Burke, who said that the English people should be entitled to equal rights, but to equal rights to unequal things.
I think that when we look at those who will benefit most from the reductions in both Income Tax and Purchase Tax, we shall find that once again it is not those who are in the lower income groups or those 8½ million who already are not paying Income Tax, but that it is again a question of making the rich richer and the poor poorer, no matter how one looks upon it.
The Chancellor spent an hour and a half telling us that this is to be a great incentive Budget, and that he appreciates the need for an increase in exports. Surely it must be common knowledge that the way to do it is not to encourage those who are already living comfortably, but to encourage those who are badly needing encouragement. Many of them were induced to vote for a Government which pledged itself unconditionally to reduce the cost of living, but which, in the Economic Survey for 1953, admitted that it had increased in the previous year by 6 or 7 per cent., while the cost of food had risen by 9 per cent.? I cannot find where any colleagues of mine in the workshops are going to feel any great incentive to produce more as a result of anything that I have heard the Chancellor say today, and for people like myself, coming from industry, one would be really lacking in one's duty if one did not say so. It is all right for


us in this House to try to theorise on these matters, but, if we look at it from the point of view of the man who feels that he is not getting a square deal in industry, and who sees that, when there is money available to make possible remissions of taxation, people other than himself receive the benefit, while he is expected to give increased production on the strength of what others are getting, we can see that it is sheer nonsense.
The Chancellor was trying to tell us in the beginning of his speech how much the economy of Britain had improved in consequence of his own policy. One does not blame any man for trying to crack up his policy as a great success, but an hon. Gentleman opposite has told us that this Government had saved the nation from bankruptcy. Anybody who says that cannot have read the Economic Survey issued by the present Government. I would ask hon. Gentlemen opposite what are the things which this Government have done which have saved this nation from bankruptcy. There is not one thing which they can give as an example.
If we read the Economic Survey for 1953 from cover to cover, we find that it repeats time after time in different sets of words the statement that the only things that have happened are that the terms of trade have moved fortuitously in our favour and that the volume of imports has been slashed. In saying that I challenge contradiction, and will give way to anyone who will tell me otherwise. That being so, how can the Chancellor expect Members of Parliament to believe the story about the financial and economic policies pursued by the Government being responsible for any betterment in the economic standards of the country?
The facts against which we should review this Budget are briefly these. In 1952, the volume of our imports was 8 or 9 per cent. lower than in 1951 and the price paid for them was 2 per cent. less. In spite of the fact that the prices which we obtained for our exports were 5 per cent. higher than in 1951, the volume of goods exported fell by 6 per cent. Therefore, we had only £88 million more on our visible account.
Industrial production was down by 3 per cent. whereas the Chancellor expected, and indeed budgeted for, an increase of some 3 per cent. in our production level.

The cost of living was up by 6 per cent. and food prices by 9 per cent. Those are the facts against which we must review this Budget, and I suggest that no survey of the year's work would be complete unless we looked at the stock position.
In 1951, the Labour Government added to our stocks to the extent of some £450 million. During 1952, not only did we not invest anything at all in stocks, but we suffered a reduction in stocks held overseas and in the pipeline to the extent of some £100 million. I suggest that at a time when the terms of trade were favouring us, as they were in 1952, it was a major political blunder to cease from stocking up. Stock was worth far more to us at that time than even gold and dollars.
Stock held by tradesmen, and so on, in 1951 appreciated by some £900 million, and I repeat that to refrain from stocking up at a time when the stock which we were holding was appreciating at such a pace was indeed a major political blunder. It is estimated that the present annual increase in the world population is 1.25 per cent. while the annual increase in world agricultural production from 1937 to 1950 was only.3 per cent. In such circumstances, can we really hope that food prices will either remain at their present level or be reduced in any conceivable period of time? I should have thought the logic of that was that food prices would tend to rise, and that, therefore, it was wrong to refrain from stocking up, at any rate so far as food is concerned.
Raw materials and food are our two main imports. If we take 1913 as representing 100, the index for manufacturing production in 1950 equalled 247 while the index for primary production was only 155. In other words, the speed at which we are using the world's raw materials has increased by one and a half times while the speed at which we produce them has increased by only one half.
Despite periods in which it will not happen, I should think that the tendency of raw material prices will be to continue to rise. When the Government took office in 1951 they decided—if I may descend to the vernacular—to plug a line about empty cupboards. The country has now the right to demand an explanation as to how it has been possible to continue our industrial activities with empty cup-


boards, which are now at least £100 million emptier than they were when the Government came into power.
I agree that we are living in an age in which industry is substituting new synthetics for old types of raw materials, but I do not believe that even the Leader of the House of Commons would try to convince the nation that British industry is so far ahead of its competitors in this field that it can produce goods from the skeletons hanging from the candelabra which the right hon. Gentleman once told the House was all that the Government inherited. I suggest that he will go down to history as "Cold Comfort," but we can congratulate him on being more successful in conjuring up finished products than the Ministers in charge of economic affairs.
The fall in productive levels in 1952 is a serious matter for all of us on all sides of the Committee. It is no good the Chancellor or any of the Ministers in charge of economic affairs to attempt to dismiss this fall as being typical of what has happened in other countries. The Chancellor's own estimates of March last year have been shown to be wildly inaccurate and, as has been pointed out from this side of the Committee, that has been reflected in the fact that we have only £88 million surplus against the £510 million for which he budgeted.
The world economic reports of the United Nations reveal that production in the United Kingdom, as distinct from that of other countries which they group together, dropped more in 1952 than did production in any other comparable country, except Denmark. The reports also show that whilst we dropped back to approximately the 1950 level of production the group of countries named improved their productive level by 9.6 per cent. over 1950. The reports make other interesting analyses, which include the fact that wages increased by a smaller amount in Britain than in any of these countries, except the United States of America and Belgium.
I often wonder what would have happened if the Chancellor had had his own way and he had introduced the wage freeze. As it was we had a 7 per cent. increase in wages, as against 11½ per cent. in 1951, not because he decided that the -workers should have that, but despite

everything that he could do to stop them receiving it.

Mr. Cyril Osborne: Surely the hon. Member is not accusing the present Chancellor of introducing the wage freeze. Surely my right hon. Friend inherited that from Sir Stafford Cripps.

Mr. Lee: The hon. Member will not get away with that one. He may remember that last year the Minister of Labour was told that he must not sign certain agreements on wage increases which the wage councils had sent to him because the Chancellor said that they must not have it even though food subsidies had been slashed and the cost of living was higher. The hon. Member, who knows industry as well as I do, knows that the Chancellor was not concerned about the 1,500,000 lower-paid workers, but the employers in engineering, mining and the railways, when there were already applications before them—

Mr. Osborne: I know that the hon. Member would not wish to misrepresent the position. He was saying that my right hon. Friend introduced a wage freeze. He did not introduce it.

Mr. Lee: I did not say anything of the sort. I pointed out that during last year the Chancellor of the Exchequer slashed the food subsidies; then when certain lower paid workers asked for an increase in their pay their employers agreed to the increase, and this agreement had to go to the Minister of Labour for signature, but the Minister of Labour dared not sign that agreement because of the attitude of the Chancellor of the Exchequer who said that they must not have wage increases, solely on account of the food subsidies being slashed. That was the point I was making.
I want to come to a point which perhaps has more bearing on the future than on the present. We are, of course, reviewing not only our finances for next year but also our economy, and it is important that at this stage we should analyse the direction in which we may be travelling. We are all very happy that there seem to be more favourable prospects of peace in Korea. We are very glad to know that there may be a general lessening of the tension between East and West, which may mean the end of the cold war. But what is to be the future of British industry


in the new conditions which that situation would bring about? This issue is the most serious which the country and, indeed, the Western world have to face, and it would be wrong of us to ignore this issue.
The Financial Secretary to the Treasury will, no doubt, agree about the vital nature of our engineering exports during the next year or so. We all agree that if we cannot export our engineering products, capital equipment and so on, this country cannot live as a first-class Power. If the possibilities of peace improve, what will happen to our rearmament programme? We should all like to feel that there will be a lessening of the need for arms and a tailing off of the vast expenditure to which the Chancellor referred this afternoon. He told us the actual figure which we are to spend this year on armaments, and we should all like to feel that that amount could be reduced as the result of a better understanding between ourselves and Moscow.
I am very much afraid, however, that if that state of affairs does arise, it may well be that peace doves and unemployment queues will become synonomous terms. For my part, I do not believe there is any reason why that should be. I was very happy to see what I regarded as a first-class letter in this morning's "Manchester Guardian" from the hon. Member for Louth (Mr. Osborne) who discussed this question, and I associate myself with his sentiments. I believe that this Government, with the United States and French Governments, and indeed the Governments of all the Atlantic Pact Powers, should now be actively engaged in deciding how they are going to swing over to peace economies without creating unemployment in the Western world.

Mrs. Braddock: They do not believe in planning.

Mr. Lee: Having emerged from the cold war, which was intended to help encompass the economic disintegration of the West, we may see the greatest paradox, the greatest irony of all time, in that peace may bring about that which preparation for war failed to achieve, namely, the disintegration of the economies of the Western nations. The Government should now be putting that possibility squarely to their colleagues in

the United States and telling them that it must not be allowed to happen.
We know the methods which could be adopted to prevent that horrible thing from happening again, but if this Government or, more particularly, the Govment of the United States, allow themselves to be jockeyed along by power groups whose only interest lies in getting vast reductions in taxation—in other words, slowing down the economies of their countries—nothing on earth can prevent mass unemployment in the Western world.
I have been concerned with this issue ever since the Prime Minister announced that the Government were lengthening the period of the rearmament programme. I have put down Questions to the Prime Minister, but I have not had any answers. I do not believe that we have reached a period in man's development when huge capital developments are not needed in many of the continents. I refuse to believe that we must depend upon the production of arms for prosperity.
Both parties agree on the necessity for the implementation of the Colombo Plan, for example. In the United States there is that great conception of President Truman—the Point Four programme. Now is the time—with the possibility of a reduction in armament production—for the governments of the Western nations to get down to the job of planning a colossal international effort to bring mechanised equipment to the Far and Middle East, in order that they can vastly improve their agricultural production, for that, in the last analysis, is the way to avoid a third world war.
I know that we differ in our interpretations of the objectives of Communism in regard to this matter, but I do not believe that there is any difference between us in our understanding of the squalor, misery and degradation which is now the lot of the peoples of the Far East and which implants in men's minds the feeling that "anything is better than this." How can one possibly expect these people to want to retain the status quo and to realise that there is a way in which they can be given a higher standard of living, if they have to live for ever among conditions of squalor?
We are in grave danger. The E.C.A. once calculated—with data from the 1929 slump and the recessions of 1938 and 1949


—that a fall of 4 per cent. in United States consumption induced a fall of about 25 per cent. in their overall imports and 33 per cent. in their imports from the sterling area. That is what faces us now. Any move to lessen the virility and pace of the American economy may well bring about that situation.
I am not the type of person who wants to go cap in hand to Washington, Moscow or any other capital. I believe that the British nation is a first-class nation, to whom the world owes many things. But we must be objective. I do not think that any hon. Member would deny that if a slump came in the United States at the present time nothing could stop it from coming across the Atlantic to Britain.
If that is the case I suggest to the Chancellor that it is quite wrong to give the impression—as he gave this afternoon—that our economy is now stable, buoyant and so much improved, as distinct from 1951. If I were an American citizen, heavily taxed in order, as I should put it, to provide £120 million out of the £300 million which the Chancellor swanks about as his surplus, I should feel that if the British economy were as strong as the Chancellor says it is, then it was time I stopped paying anything towards either Marshall Aid or rearmament aid or, indeed, towards any other sort of aid for Britain.
During the last two or three years, the original basis of the Marshall Plan has changed completely. Instead of it being a plan to ensure that Europe could recover from the ravages of war and could bring its capital equipment up to standard again, it has become almost exclusively aid for rearmament. Naturally, if we enter a period during which there is no need for rearmament, the average American will argue that there is no further need for aid to Europe. I do not believe that that position has yet been reached. Very much depends on the United States still helping the recovery of Western Europe.
In short, I believe that we may well be at a turning point in world history. Whether the hon. Member for Louth (Mr. Osborne) believes that under normal conditions we should plan or whether he believes we should not plan, I hope he

will agree with this: at a time when such a vast changeover must take place in the nature of productivity in the whole Western world, it is absolutely essential that there should be planning from now on so as to ensure that as we take the great rearmament programme out of the economies of the Western nations, there is not a great void in their place but a great drive such as I have suggested, taking the form of mechanised agricultural implements which could be given to the Far Eastern and Middle Eastern nations. That alone can help us to prevent a great industrial and economic slump coming to Britain.
I do not blame the Chancellor in any way in this part of my speech when I suggest that nothing has been provided in his Budget against such a contingency. These things have not yet developed. On the other hand, it would be quite wrong for the Government from this day onwards not to devote a high proportion of their time and thinking to this great problem, which I hope the Committee will think is the greatest problem now facing us. Upon it I believe may well depend whether the West can advance to a higher standard of living, maybe not at a great pace but nevertheless going in the right direction.
Most of all, in this way, we can show the people of the Far and Middle East that we desire to help them and to use our science, our skill, those things which we have developed over the centuries, not in a selfish way on our own behalf but in order that those people can achieve higher standards and in order that the basic causes of war may be dissipated for ever. That, I believe, should be the objective of the Government.
In the months which lie ahead the House should judge the Government by the way they approach this problem. At the moment we see no signs of that sort of plan. I regret it, though as yet I cannot blame the Government because they have had no chance of developing it. But I hope the Financial Secretary will agree that this is one of the jobs to which the Government must now bend their energies, because it may well be that our chances not only of a decent life in the future but of preventing a third world war will depend on the success or failure of their efforts in this field.

9.4 p.m.

Mr. William Wellwood: I merely wish to correct what I am afraid may have been a mistaken impression which arose from the speech of my hon. Friend the Member for Antrim, South (Sir D. Savory), who referred to the absence from the Gallery of Major Sinclair—I confess a very regrettable absence. Major Sinclair's successor and acting Chancellor for Northern Ireland was in the Gallery all afternoon, throughout the speech of the Chancellor of the Exchequer, and I am quite sure that he paid very great attention to it. In case that mistaken impression may get abroad, I want to correct it.

9.5 p.m.

Lieut.-Colonel Marcus Lipton: I want to say how impressed I was by the speech of my hon. Friend the Member for Newton (Mr. Lee). It is fantastic that one of the factors which causes fear when we survey the economic scene is the prospect of peace breaking out in the not too distant future—a peace which, should it come, will knock sideways the whole of the economic fabric constructed on both sides of the Atlantic during the last year or two.
I am afraid that my hon. Friend was beating the air when he pleaded with the present Government to consider this fundamental problem. It will never be tackled until there is not a change of heart in present Ministers but a change of Government. Without a change of Government there is no hope of our adjusting our economic life to the new circumstances that will arise if and when the cold war becomes a dream.
I consider that the Budget statement is on a par with the statement the Chancellor made last year. I will put it no higher than that. I remember his saying last year:
To prevent consumption increasing I must keep the Budget surplus substantially unchanged."—[OFFICIAL REPORT, 11th March. 1952; Vol. 497, c. 1288.]
When he said that he had in mind a Budget surplus of over £500 million. We know what has happened. That estimated Budget surplus has worked out to the very much reduced figure of £88 million, the smallest surplus we have had since the war, with the largest overall deficit we have had since the war. If the Chancellor can be so far out in his estimates

as these figures show I have little confidence in his judgment of what is to happen in the next 12 months.
The most serious menace from the economic point of view is the fall in production that has taken place. We are the only nation in the world now producing less than we were a year or two ago. I so well remember the cheers with which last year's Budget was greeted by hon. Members opposite. That was the first of the so-called incentive Budgets to which we were to be treated. This year we have another "incentive Budget." If the incentives that are offered in this year's Budget achieve the same meagre results as last year's Budget then the statement which has been so warmly welcomed by hon. Members opposite today will, in 12 months' time, be bound to be just as much a flop—[Interruption.]—as last year's Budget.
The hon. Gentleman the Member for Farnham (Mr. Nicholson) has just come in and does not know what we are talking about. He has a vague recollection that the Chancellor made a Budget statement today, but he has to wait until he reads tomorrow's papers before he knows what has happened. I propose to ignore the rather stupid and irrelevant interruptions of the hon. Member because I think that with the dawn wisdom will come, and he will have an opportunity of reading what he ought to be thinking when he sees the Conservative editorials in the national Press tomorrow morning.
What has happened in the past year? We are the only nation of any importance whose production has fallen, which leads me to make the perfectly justifiable statement that the so-called incentive Budget last year failed to increase production. So far from increasing production, it has produced more unemployment and more short-time working. Today, the Chancellor boasted of his export surplus of £300 million this year. It includes £120 million of American aid and something like £100 million depletion of stocks, so this £300 million so-called surplus does not stand up to analysis. When it is analysed we find it includes these two purely adventitious items, which account for almost the whole of the so-called surplus.
There have been some boasts about the position of our gold and dollar reserves.


but with all the boasting of the Chancellor and his hon. Friends our gold and dollar reserves are still below what they were in October, 1951, when the country was supposed to be on the verge of complete economic collapse. I hope that the party opposite will not expect the public or hon. Members on this side to swallow some of what I must describe as sheer claptrap that we have had today from both the Chancellor and hon. Members opposite who are so pleased with this "incentive Budget."
The Chancellor prides himself on the success with which the balance of payments problem has been tackled during the past year, yet our exports have been 6 per cent. lower than in the previous year. This is the first occasion since the war on which British exports have fallen. Our imports have been reduced, but that is due largely to the lower consumption of imported raw materials without which it is not possible to maintain production at a reasonable level. It is true that during the past financial year there has been some increase in the exports of engineering products, but the volume of those exports is more or less the same, the increased revenue derived from those engineering exports is the result of higher prices.
We still want to know what was decided at the last Commonwealth Economic Conference, and what was the result of the recent economic talks in Washington. I have the feeling that the understandings arrived at during these two conferences have probably gone a long way to vitiate any attempt made in this Budget to improve our economic situation.
The Chancellor was very vague on the subject of convertibility. He has every reason to be vague about it. Although many hon. Members opposite strongly advocate the earliest possible convertibility of the £ with the dollar, the Chancellor is a little more coy than some of his more vociferous supporters.
I should now like to refer briefly to the problem of National Savings. In his Budget speech last year the Chancellor said—and I summarise it, leaving out one or two words that are not essential, quoting only the words which give the effect of what he said:

I should like to stress the importance of National Savings…I believe in savings…I believe what I am doing will give the movement a great new opportunity of which I hope it…will take advantage."—[OFFICIAL REPORT, 11th March, 1953; Vol. 497, c. 1288.]
That is what the Chancellor of the Exchequer said in last year's Budget speech on the subject of National Savings. What is the result? What do those fine words boil down to? A drop of £73 million in the aggregate National Savings, an excess of repayments over receipts, and withdrawals of £66 million more than in the previous year. That is one of the result of last year's "incentive Budget." as a result of which this country has supposedly re-established itself and rehabilitated its economy. The National Savings movement has never had such a hard blow dealt to it as it has received at the hands of the present Chancellor during the past 12 months.
So, when the Chancellor talks about the need for stimulating savings, we have to examine his professions with great care, because our experience in the past does not lead us to accept, with any very great degree of confidence, his prognostications for the future. With the £ buying less and less each week, the housewife finds that the domestic budget cannot be balanced. Hon. Members know that the £ does buy less and less. The value of the £ now compared with what it was in October, 1951, is about 18s. 5d. The words I have quoted were included in the Conservative statement of policy, "Britain Strong and Free." The Conservatives were then blaming the Labour Government for something which has become only too true after nearly two years of Conservative rule.
I shall not refer to the harmful effect of the increased interest rates which have added a very substantial burden to the debt charges. I shall not refer to some other very serious omissions in this year's Budget—nothing done for the holders of post-war credits, nothing done for war pensioners, nothing done to help the old-age pensioners, nothing done to name the day on which equal pay is to be introduced, a resolution on which was accepted by the Government not so long ago; not a word about these important topics.
They are topics which, of course, affect very closely the lives of ordinary people to whom these Income Tax concessions announced today do not mean a thing.


Let us examine the value of the Income Tax concessions announced today. A reduction of 6d. in the £ will be hailed as a marvellous thing by hon. Members opposite. But if they will take the trouble to examine the Financial Statement for 1953–54, which has been issued today as a White Paper, they will find this very interesting example. I shall quote only one example to show the value of what is going to be a very loudly-trumpeted feather in the cap of the Chancellor of the Exchequer.

Mr. Godfrey Nicholson: How does one trumpet a feather?

Lieut.-Colonel Lipton: I am sorry that the hon. Member is not in full possession of his faculties, otherwise he would be able to follow what I am trying to say. I am afraid that I must give up the hopeless task of trying to impress the hon. Member for Farnham with any understanding of what the Committee are trying to do at the present time in discussing the Chancellor's Budget statement.
I was referring to the White Paper on the Financial Statement for 1953–54. The effect of the marvellous Income Tax concession announced today on a married man with two children, earning £800 a year, is to give him something like £6 a year or 2s. 6d. a week. A man has to earn £800 a year to save 2s. 6d. a week as a result of the Income Tax concession. If a man does not earn £800 a year, the amount he saves by reason of the concession is all the less. During the past 12 months the cost of the necessities of life has increased for the individual earning £800 to a far greater extent than the 2s. 6d. a week which he is now given as a kind of recompense for the inflation which has brought down his standard of life and that of everyone else in the country.
The Chancellor of the Exchequer is, cautiously, not altering the food subsidies very much, although I believe he will save another £20 million or £30 million during the next 12 months as a result of various adjustments, on top of the £160 million which he has already achieved by way of cuts. It may be true that the Government have saved about £160 million by cutting food subsidies, but as a result of forcing up the cost of necessities they have set in train a series of wage demands and have made inevitable a series of wage increases as a

result of which the total national productive effort is saddled with a far greater burden. I estimate that the £160 million saved in food subsidies has cost the country twice as much in increased wages which the present Government has had to concede during the past 12 months.
Reference has been made from the Government benches to the great discontent which will be felt by all in the transport industry at the refusal of the Government to lift the burden of motor fuel taxation which has multiplied nearly five times during the past few years. It has a highly inflationary effect; it enters into the cost of distribution and the cost of every article that ordinary people have to buy. The 2s. 6d. per gallon tax on diesel oil is equivalent to a tax of £25 a ton on coal. That is a measure of the additional burden which has been imposed by the present Government on our transport industry. Ours is the only country in Europe which has not a preferential rate of duty for diesel oil used for road vehicles.
When we examine the other figures which have been announced today we realise that the Chancellor has been unable to justify charges of waste in the public service. Instead of being cut, expenditure has gone up. The revenue has fallen below what he thought he would get. That is not surprising in a year during which the Government's general policy has led to shrinking production, shrinking trade, shrinking employment, less output, smaller wage packets and reduction in exports. That is what we have achieved as the result of last year's incentive Budget, and I am afraid that is what may well happen as a result of the second dose of incentive to which we have been treated today.
In their 1951 Election manifesto it was pointed out by the Conservative Party that it was the Conservative aim to increase our national output. The manifesto said:
Here is the surest way to keep our people fully employed, to halt the rising cost of living and to preserve our social services.
All the matters in respect of which the Chancellor of the Exchequer and the present Government are claiming credit are, on examination, found to be really debits. They have failed to increase our national output as a result of which they have failed to keep our people in work;


they have failed to halt the rise in the cost of living and failed to preserve our social services. On all these counts, remembering what they have done during the past 12 months, I must put on record my own profound disbelief in the judgment of the Chancellor and my belief that this year's Budget will lead to the same disastrous results as last year's "incentive Budget" has led us.

9.26 p.m.

Mr. Nigel Fisher: I know that the hon. and gallant Member for Brixton (Lieut.-Colonel Lipton), with his usual courtesy, will acquit me of discourtesy in not following his interesting argument, because I wish to detain the Committee for only a few minutes to say what a splendid Budget the Chancellor of the Exchequer has introduced. I am sure that it will get an extremely good Press and will deserve to do so. It will be received with enthusiasm by almost every section of the community and I do not believe that the woeful attitude of the hon. and gallant Member will be reflected in the general public reaction tomorrow morning.
I am delighted at the reduction in the standard rate of Income Tax and the very real assistance given to industry by the initial allowances for factory building, plant and machinery, and the encouraging prospect of the termination of E.P.L. which many on both sides of the Committee always thought a thoroughly bad tax. The all round reduction of Purchase Tax will be of great benefit to everyone; and in the smaller concessions there will be good will for the exemption of amateur sport from Entertainments Duty. I think it an imaginative and graceful gesture in the year of the visit of the Australian cricket team to this country to make an exemption for cricket from the Entertainments Duty.
As Parliamentary Private Secretary to the Ministry of Food I should perhaps be careful about making any comment on sugar derationing, but one can at least say that we all realise with what immense enthusiasm this will be hailed by the hitherto hard pressed British housewife who in the past six months has at last seen a Government doing something to ease her difficulties.
It is quite true that the Chancellor is, in a sense, taking a

chance by budgeting for a deficit, but the majority of this is below the line expenditure, much of it to local authorities for housing. One hopes that local authorities will in future go to the market instead of the Treasury for financial assistance. I am sure that my right hon. Friend is right to take a chance and that, despite what was said by the hon. and gallant Member, I think it is certain that this will be an incentive Budget. It is, moreover, designed to keep costs and prices down and the cost of living stable. It may be criticised by our opponents as a rich man's Budget, but the spread is very wide. There is some jam in it for almost everyone. I do not believe that the British people are a vindictive people. So long as they get a little help for themselves, I do not think they begrudge the same help to others.
I should like, with respect, sincerely to congratulate my right hon. Friend on an able and imaginative Budget which will further enhance the high estimation in which he is already held by the vast majority of his fellow countrymen.

9.30 p.m.

Mr. William Keenan: I do not wish to follow in detail what the hon. Member for Hitchin (Mr. Fisher) has been speaking about other than the fact that he referred to what we are likely to see in the newspapers tomorrow. What he said was very true; I suppose that with few exceptions the national newspapers will eulogise to the full everything that the Chancellor has suggested and will hail this as a great Budget.
I wish to make one comment on the quoting of newspapers, which seems to me to be a little overdone. I do not know why so many Members of the House of Commons—on both sides—should be so anxious always to quote the "Observer," the "Manchester Guardian" and "The Times" as though they were the be all and end all of all knowledge. Generally speaking, some well-paid journalist is no better and no more capable than someone who is a responsible person of expressing an opinion on an important matter. I repeat that the quoting of different newspapers on important national and international matters is overdone and that too much credit is accorded to journalists for their opinions, judging by the general tone of their


papers. I do not think their opinion has the value that is apparently placed on it from time to time.
I turn to the Budget, and I have at times wondered whether we have been listening to a debate on the Budget. From time to time I have thought that we were dealing with defence and many other problems outside even the scope of the Economic Survey. Things have been said by one or two Members which I feel like saying a few words about. I was almost in tears when the hon. Member for Antrim, South (Sir D. Savory) was himself shedding tears about the poor Surtax payer and about how he was worried and harassed; and how some of those who owned the great country houses of our time were today compelled to let the public see them. What worried me was that the hon. Member seemed to think that the public should not see them. He seemed to think it was a good thing that their owners should be able to charge for admission.
The fact remains that this Budget will do something even for the Surtax payers. I am a little concerned about one or two things which I think the Chancellor might have done and which he has not done. I was very much concerned four or five years ago about post-war credits. We ought at that time to have begun to repay them by progressively lowering the age of repayment by a year each year—from 60 and 65 to 59 and 64 the following year and so on. Unfortunately no Chancellor has agreed that that should be done. I suppose that successive Chancellors have acted on the advice of those magicians at the Treasury. In this respect the Chancellor has, like his predecessors, missed a great opportunity.
There is one other thing he might have done, and I say this because of some of the things which the Chancellor has not done. This is an "incentive Budget." What incentive has the Chancellor provided and to whom has he given it? Are the individuals who earn £600, £700 and £800, or £6,000, £7,000 and £8,000, the individuals who produce the wealth and do the hard work of this country?
Only those who earn over £500 a year will benefit from this Budget. But what about the 7 or 8 million who will not receive any benefit, those who have to live on about £6 a week or even less and who pay no Income Tax at all? This Budget provides no incentive for them.

They have not all got their mother-in-law or their own mother living with them, and so far as they are concerned I maintain that the Chancellor has indeed missed the boat, and I hope that next year we shall have a different Chancellor.

Mr. Fernyhough: And a different Government.

Mr. Keenan: I suggest again, as I did a few years ago, that we should pay a family allowance for the first child. If the Chancellor did that he would provide some benefit for a great many of the 7 or 8 million for whom his present proposals provide nothing.
What has the Chancellor done for low wage earners and those who live on fixed incomes, especially old age pensioners? Last year in anticipation of an increase in the cost of living arrangements were made prior to the presentation of the Budget for increasing National Assistance. It was then asserted, wrongly in my opinion, that the increases given in National Assistance and in contributory pensions covered the expected increase in the cost of living. But any of us who are aware of the effect of that increase in the cost of living will know that is not the case. Before any change was effected as a result of the Budget proposals the cost of living had gone up to a greater extent than could be covered by the increases.
The cost of living has continued to increase. Although the figures quoted last year may cover rationed commodities they do not cover unrationed commodities, and no provision has been made for those with fixed incomes and low wages who will not benefit from a reduction of 6d. in the Income Tax. Whom does it touch? We can truthfully say today what we said 12 months ago, when the last Budget was introduced, which was then described on this side of the Committee as a rich man's Budget, because there was a similar slight reduction in the Income Tax rate.
If I remember rightly, the easement secured as a result of changes in the income Tax made last year, which were similar to those which have been made this year, ranged from about £30 to £70 a year. It ranged from those in receipt of £600 a year, and, again this year, we find that none of these individuals were really in need of any easement of Income Tax. At any rate, they were considerably less in need of some easement of the


burden of living than all these other classes whom I have indicated as getting nothing from this Budget. The only thing they will get will be the increase in the cost of living, which will continue.
I admit quite frankly that I am rather surprised that the Chancellor did not slash the food subsidies. I want to see, not a further reduction in the food subsidies, but rather their restoration, so that there will be a balance of income which the last Government very successfully effected. There is to be a reduction of £30 million in the food subsidies, according to what the Chancellor said today. I am very glad that he has not done any-think like he did last year, because of the effect which such action must and would have on the different classes whom this kind of thing particularly affects.
From my own personal observation, I can say that the pensioners today are worse off than they were 12 months ago. [HON. MEMBERS: "NO."] Hon. Gentlemen opposite should tell the old age pensioners in their constituencies that they are as well off or better off than before and they will find that the pensioners will not agree with them. In any case, I am very satisfied that, at least, the position is no worse. The indication is quite clearly that the Chancellor and those who advised him have realised the effects which the slashing of the subsidies last year had upon those people who were adversely affected by the increase in the cost of living and I believe that they realised that it was not a wise thing to repeat.
I suggest to the Committee, as I did some three or four years ago, that something should be done about post-war credits. I am hoping that one day what I suggest will soak in, and that we shall get a Chancellor who will deal with the problem. I have heard the whole idea of post-war credits described as a racket. I was one of those who when post-war credits were first introduced during the war was of the opinion that we should be darned lucky if we ever received payment for them, and I was very thankful when the Labour Government accepted responsibility for them.

Brigadier Terence Clarke: They did not pay them.

Mr. Keenan: The fact is that 25 per cent. have been paid. I admit that is not

enough, and I am hopeful that sooner or later some Chancellor of the Exchequer will attempt to liquidate this debt to postwar credit holders by reducing each year the age at which they are to be repaid.

Brigadier Clarke: Six years of Socialism.

Mr. Keenan: The hon. and gallant Member talks about six years of Socialism merely because his mind cannot think of anything else.

Mr. Ellis Smith: He is a brigadier.

Mr. Keenan: I am reminded by my hon. Friend that the hon. and gallant Gentleman is a brigadier, and I am not surprised that such an interjection should come from a brigadier.

Brigadier Clarke: Six years of Socialism.

Mr. Keenan: We have only had 18 months of Tory Government and this is the second Budget which the present Chancellor has presented. As in last year's Budget, he has provided for those least in need and has neglected to do anything for those most in need. Had he wanted to provide an incentive Budget he would have done something for the lowest paid workers; he would have given something to stimulate their activity, were that necessary, rather than have given some easement of tax to people who do not need it.
For all these reasons, I think this is a bad Budget. I know that with the exception of two newspapers it will get a good Press reception and that the right hon. Gentleman's speech today will be referred to as the finest speech he has ever made. In my opinion, it is nothing of the kind. He has failed to do something which might have stood the workers of the country in good stead—

Brigadier Clarke: Six years of Socialism.

Mr. Keenan: —instead of which he has given his friends something to the detriment of everybody else.

9.49 p.m.

Mr. W. G. Bennett: There is obviously some misunderstanding among hon. Members opposite about the actual benefit that will result from the reduction of 6d. in Income Tax. We have heard it said that it is a sop to the rich and is being given to people


who do not need it. Do hon. Members opposite realise that any man would rather work for an employer who has something in the bank than for one who is bankrupt? The reduction of 6d. in the Income Tax will encourage many working in industry to ask for something if they require it.
The 6d. is going to industry and not to the employers. The railwaymen might have had a rise if there had been money in the kitty, but there was no money in the nationalised industry so they could not have it. One would imagine from listening to one speech after another from the other side of the Committee that this country was bankrupt, but not so long ago we were in such a flourishing condition that many Members of Parliament thought that they ought to have a rise.

Mr. Keenan: So they ought.

Mr. Bennett: Let us look at where we are now.

Mr. Keenan: Will not the hon. Member agree that those who pay Surtax will benefit by this easement in taxation?

Mr. Bennett: If one wants to secure something one must go to the source where that something is available, and it is much easier to get it from an individual than from a Government.
The hon. Member for Kirkdale (Mr. Keenan) has told us that it is impossible to recover post-war credits from the Government. I wonder whether he remembers that about 18 months ago his own Chancellor of the Exchequer could not find the money to buy a million tons of sugar. That is the answer which indicates the position in which we are in today. Today, we are in such a better position that we can afford to buy the sugar. Tea is off the ration. Hon. Members opposite say that people cannot afford to pay for these things. Any housewife would rather have the opportunity to buy 10 oz. of sugar if she can afford to pay for it than 6 oz. at an infinitesimal difference in price. We are told that there is a possibility of our having unlimited sugar, and it is likely that there will be no increase in the price.
I have listened to previous Budget day promises to reduce Purchase Tax "next time," but today we have had a reduction in the tax on almost everything. Is not that a big improvement on last year?

Is it not a direct incentive to everyone? [Interruption.] Perhaps the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock) will listen to this. She claims to have the support of old-age pensioners. I represent a Glasgow constituency and I have the support of my old-age pensioners. They are quite convinced that they are at least as well off this year as they were under Socialism. [Laughter.] That is a matter of opinion, but they are quite convinced that they are better off. After listening to the speeches from hon. Members on the other side of the Committee I have no doubt at all that theirs is a case of sour grapes. This is a wonderful Budget and hon. Members opposite are only very sorry that it has not been introduced by a Socialist Chancellor.

9.54 p.m.

Mr. John McKay: I am sorry that I should be rising to speak at nearly five minutes to ten o'clock.

Brigadier Clarke: Too early.

Mr. McKay: I understand that this debate ends at 10 o'clock. I am reminded of the tactics that even trade unionists used to adopt years ago when they did not want a question voted upon. They said that they would make "roly-poly" speeches and talk the subject out. I have sat in this Chamber since 2.30 p.m. in the hope of being called and, under the procedure of the Committee, I do not intend to develop the speech which I intended to make.
The hon. Member for Glasgow, Wood-side (Mr. W. G. Bennett) was well satisfied with the Budget. He said that sugar would not be rationed in the future while, at the same time, he almost admitted that the price might go up a little. The experience of the ordinary housewife is that when the price of sugar goes up a little, day after day the prices of many other things go up a little. One little bit on top of another amounts to a very big bit in the end. Today, the housewife's job is exceedingly hard, and from the point of view of the mass of the people there is nothing particularly good or noteworthy in this Budget.
The newspapers have a financial interest in industry. Their views on finance are influenced by the people who are vitally interested in trade, Profits Tax and Excess Profits Tax; they are the


men who are getting the best out of the country, the small minority who are well-to-do and who have made tremendous profits during the past five years. They are living comfortably and are getting bigger profits year by year.

Brigadier Clarke: Under six years of Socialism?

Mr. McKay: They are building up great reserves to enable them to develop industry, and when Budget day arrives the suggestion is that it is vitally necessary for the nation to help these wealthy people.

Brigadier Clarke: What about the six years of Socialism?

The Chairman: I hope that the hon. and gallant Gentleman will restrain himself.

Mrs. Braddock: Send him back to the bar.

Mr. McKay: Those men have a greater interest in the Budget than any other section of the community. They are all using these influences to create an atmosphere. Their tactics are very much like those of the Communists—to repeat a thing day in and day out until people begin to believe that it is correct—

It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Resolutions to be reported Tomorrow; Committee also report Progress; to sit again Tomorrow.

HUNGARY (MR. SANDERS)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Kaberry.]

10.1 p.m.

Mr. Ernest Davies: I make no apology for raising the case of Mr. Edgar Sanders, who was arrested by the Hungarian Government in November, 1949; falsely accused of espionage and sabotage, and convicted and sentenced to a 13 years' term of imprisonment in February, 1950.
I raise this matter for a number of reasons; first, because it is essential that the Hungarian Government should be

made aware of the fact that Mr. Sanders is not forgotten; secondly, because: opinion in this country is still strong and. embittered at the treatment that this; innocent man—a British subject—has received and, thirdly, because of the manner in which the Prime Minister dealt with the suggestion which was made by the Hungarian Government for the exchange of Mr. Sanders for the Chinese Communist, Lee Meng, and the manner in which he refused to inform the House of the reasons for the rejection of that offer.
I do not suggest that the offer should have been accepted; there are obvious reasons which might have made it dangerous to do so; but when I asked the Prime Minister to give those reasons he brushed my Question aside—as he did those of other hon. Members—and refused to tell the House why the offer had been rejected. He said that he could not deal with the matter by way of question and answer and suggested that there were other occasions on which it could be raised.
I therefore raise the matter tonight and I ask the Under-Secretary to give the information which the Prime Minister refused on 17th March, and to inform the House why the offer was rejected. The House should know the reasons. I do not say that the offer should necessarily have been accepted, but the House should be taken into the confidence of the Government and informed what is the position. In response to a supplementary question which I put to him the Prime Minister assured the House that the Government would persevere in their efforts to obtain the release of Mr. Sanders, and I should like the Undersecretary to tell the House what has been done since in the way of following up that offer, and to give an assurance that everything possible is being done.
It is fortunate that this matter can be raised at this juncture, because the position has certainly changed since the exchange offer was made. Stalin has died and there has been a certain change in the attitude of the Soviet Union and their satellites towards the Western countries. There have been indications of a desire on the part of the Soviet Union and their satellites for more conciliatory relations with the Western Powers, and in my view this attitude provides a much more favourable opportunity for making every


possible effect to obtain the release of Mr. Sanders.
Before I make proposals with which I should like the Under-Secretary to deal, I shall recapitulate the circumstances of this tragic story. The House will remember that in November, 1949, the Hungarian Government arrested three persons who were employed by the International Telegraph and Telephone Company of the United States—Robert Vogler, an American; Imre Geiger, a Hungarian; and Edgar Sanders, a British subject. They were all arrested and imprisoned. Every effort made by the British Legation to communicate with Sanders was rejected by the Hungarian Government. He was also refused the assistance of counsel; the counsel who was employed by the American company was refused a visa.
Journalists were refused visas to attend the trial. One was subsequently able to understand the reason for this because, when the trial took place, the manner in which Edgar Sanders had been conditioned became quite clear. Further, no communication to him from his family or from him to his family has been possible. It was not until 13 weeks after his arrest that he was brought to trial, when he was sentenced to 13 years' imprisonment. Vogler was sentenced to 15 years' imprisonment and Geiger sentenced to death and executed.
The release of the doctors in Moscow shows how much faith we can put in such trials as these. The curtain has now been raised and anyone who had any doubts about the possibility of there being any justification for the arrest and trial of Mr. Sanders must now have had those doubts fully dissipated. His confession of guilt was quite clearly forced upon him in circumstances upon which it is better not to dwell. The whole trial was certainly a brutal farce and, as the Government declared at the time, the evidence which was produced was but a compendium of distortion and lies.
Since Mr. Sanders has been in gaol, he has not been visited by any member of the British Mission in Budapest because the Hungarian Government have refused to permit it. As far as we are aware, no letters or parcels have reached him from this country, and certainly no communication has come from him. In fact, as

far as I am aware, it is not known even in which prison he is incarcerated.
immediately after his arrest, the Labour Government of the day broke off trade negotiations which were taking place with the Hungarian Government. Those negotiations were suspended and have not since been resumed, but I regret to say that there is still some trade taking place between this country and Hungary and, if possible, I should like to know the extent of that trade and why it continues as long as Mr. Sanders is still imprisoned and there is no communication with him whatsoever.
I am well aware that even during the time of the Labour Government, and subsequently, there have been efforts to bargain with the Hungarian Government with a view to obtaining Mr. Sanders' release. These negotiations have broken down on every occasion. Perhaps we could be told why it has been impossible for us to reach an agreement with the Hungarians for Mr. Sanders' release in the same way as the Americans succeeded two years ago in getting Mr. Vogler released from prison.
The recent offer of the Hungarian Government to exchange Lee Meng for Mr. Sanders holds out greater hope of the possibility of bringing about his release if the Foreign Office perseveres in its efforts, and follows them up immediately in the light of the present more propitious situation. I think this offer indicates, in the first place—which is certainly encouraging to his family and his friends—that Mr. Sanders is alive and well. If he were not the offer of the exchange would not have been made. In the second place, it indicates that the Hungarian Government are anxious to obtain a means of releasing Mr. Sanders and returning him to this country. I think they are anxious to release him if they can find a way of doing so, because they desire to increase their trade with this country and to restore economic and financial relations with us, which are so strained at the present time.
Further, I think it opens a way to obtain Mr. Sanders' release because it shows that there is a tie up in the Communist world. Of course, we all know there is, but here is an admission by the Russians and the Hungarians of the interrelationship of the Communist world. This shows that the Communist is one


world, as it were, because here we have the offer of a Chinese Communist in Malaya for a British subject in prison in Hungary. It provides an opportunity for us to go above the heads of the Hungarian Government, if they refuse now to release Sanders, and to seek the assistance of Moscow itself to intervene with the Hungarians with a view to obtaining his release. We could ask the Russians if they would use their good offices with the Hungarians to bring about the release of Mr. Sanders.
Certainly, there are signs that the Soviet Union and the other Communist States are more anxious to be more conciliatory towards the West. We have the release of the civilians who have been interned in Korea since the outbreak of the Korean war; we have the recent agreement over the release of the sick and wounded prisoners of war in Korea; and, perhaps even more important in this regard, we have the amnesties of the U.S.S.R. and Roumania, and there are rumours of an amnesty in Hungary. There are signs of a change in the Hungarian Government themselves and in their relationship with the West.
I suggest that, in the light of these changed circumstances, and in view of the changed attitude of the Soviet Union and the satellites to the West following Stalin's death, which change may be genuine or may not be, we should instruct the British Ambassador in Moscow to approach Mr. Molotov to ask him to inform Budapest that we are willing to resume trade negotiations immediately with Hungary if Mr. Sanders is released.
I suggest we should make those further concessions which were discussed during the previous negotiations which took place and which, unfortunately, did not come to a successful conclusion. I suggest that it would be well if we did now make this approach to the Russians—that we did it immediately. In view of the uncertainty as to the permanency of any change in attitude on the part of Russia, while the situation is as it is today, if an approach is made now there may be a greater possibility of obtaining a satisfactory outcome than if the matter is delayed.
There is one other request that could easily be made either through the Russian Ambassador in London or in Moscow itself, and that is that the Hungarians

should be asked to forward letters from the family of Mr. Sanders and his friends to him in Hungary, and that he should be allowed to send communications from Hungary to his family and friends in this country. It is a small request that I do think it would be difficult for them to refuse if they insist, as they now do, that they desire to have closer and more friendly relations with this country at the present time.
It is tragic that we have become, perhaps, hardened to this flouting of human rights in the Communist States which we have witnessed since the end of the war, and that we have come to tolerate the human suffering which it involves. I therefore appeal to the Government to exploit the present improved atmosphere, and to do everything they can in their power to obtain the release of Mr. Sanders. If the changed attitude of Malenkov and his Government is genuine they cannot refuse to make this approach to the Hungarians, and if they make the approach to the Hungarians it is in their power to ask them to carry out their wishes. If their changed attitude is not genuine, it is quite easy for us to make it clear to them that if they do not obtain Mr. Sanders' release we will not consider their protests of more peaceful intention as sincere, with all that that means.
Edgar Sanders has been languishing in gaol in Hungary, in a foreign country, for three and a half years, convicted of crimes of which he is known to be innocent. He has been refused all communication with the outside world. He has been completely isolated from his family and from his friends. At times, he has been a forgotten man. He must not remain a forgotten man; and he must not be allowed to become a forgotten man again. It is within the power of the Foreign Office—of Her Majesty's Government—to prevent him from so becoming, and that they can do if they continue to press for his release and do not cease in their endeavours to obtain it.
I hope, therefore, that tonight the Under-Secretary will give me an assurance that a new approach will be made to this matter, and that if the Hungarians—whom I hope he will tell us he has again approached since the rejection of the offer to exchange Lee Meng for Mr. Sanders—have not given a satisfactory


reply to the further approaches which were made subsequently to the rejection of that offer, then he will go beyond the Hungarians and will give instructions for an approach to be made to the Russian Government asking them to intervene. I ask him to give me that assurance tonight.

10.18 p.m.

The Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting): Not only Her Majesty's Government but the whole House and public opinion outside will, I am sure, share the views which have been expressed by the hon. Member for Enfield, East (Mr. Ernest Davies) about the scandalous, barbarous and uncivilised treatment meted out by the Hungarian Government to Mr. Sanders, who they know, as well as we do, is wholly and entirely innocent of the charges which were brought against him. I am grateful to the hon. Gentleman for raising this question tonight and giving me the opportunity to reaffirm Mr. Sanders' innocence, and to set out what Her Majesty's Government and His late Majesty's Government have done, and are continually doing, to secure his release.
First let me deal with the hon. Gentleman's complaint that the Prime Minister, when announcing the Government's decision to reject the Hungarian offer to exchange Mr. Sanders for Lee Meng, gave no reason to the House. Certainly no discourtesy was intended by my right hon. Friend but, as the hon. Gentleman will see from what I have to say, the exchange proposal was a broad question involving some very complicated considerations which my right hon. Friend thought were more the subject for a debate than for question and answer across the Floor of the House.
Of course, Her Majesty's Government did not take such a decision in any light-hearted manner. There were powerful arguments on both sides. On neither side was the argument overwhelming, either for or against the exchange. The decision was taken on balance and principally for two reasons, which I propose to give to the House tonight.
The first was that such an exchange would have provided a dangerous precedent for further bargainings of the same type and might well have encouraged the arrest of other British subjects still living

in Communist States as potential hostages. The second reason for rejecting the exchange concerned the position in Malaya. As the Prime Minister explained in answer to a Question on 12th March:
One of the features which should not be overlooked is that there are not two countries but three countries involved in this matter."—[OFFICIAL REPORT, 12th March, 1953: Vol. 512, c. 1503.]
As the House is no doubt aware, the prerogative of mercy in the State of Perak where Lee Meng was condemned lies with the Sultan of that State. In the exercise of that prerogative, the Sultan commuted the death sentence on Lee Meng to one of life imprisonment. Any further alteration in her sentence would have involved intervention by Her Majesty's Government and, in the circumstances, such intervention was not considered justified.
As the hon. Gentleman will, I feel sure, agree, Her Majesty's Government must always be guided by the interests of good government and sound administration in Malaya, and they cannot feel and do not feel that the proposed exchange was in accordance with those interests. Those were the two reasons which on balance convinced Her Majesty's Government that this exchange proposal should be rejected.
The hon. Gentleman has already recapitulated the history of this tragic case. As he said, Mr. Sanders was arrested and sentenced by a Hungarian court to 13 years' imprisonment on a charge of espionage. The hon. Gentleman asked me to state why it was that the Americans were able to obtain the release of Mr. Vogeler who was arrested with Mr. Sanders and sentenced to 15 years' imprisonment. The answer is that the Americans were able to secure Mr. Vogeler's release in return for a number of concessions of which the principal was the re-opening of the Hungarian consulates in the United States of America. Unfortunately, these concessions are not open, and were not open, to Her Majesty's Government to offer since there are no, and never have been any, Hungarian consulates in the United Kingdom.
I have been asked what we have done to secure Mr. Sanders' release and to state what exchanges have taken place between us and the Hungarians upon this subject. First of all, let me say that the


reason for any reticence which may have been shown by Her Majesty's Government regarding these exchanges has always been our anxiety in no way to prejudice Mr. Sanders' case. As the hon. Gentleman knows, we have gone out of our way to discourage public discussion of this matter while negotiations have been proceeding with the Hungarians. Alas, all these negotiations have broken down, but I still claim that the only wise course was to keep them secret while they were going on.
Of course, had we had any information about Mr. Sanders' well-being we should have passed it on to his family, but as the House knows we have never been allowed access to Mr. Sanders and therefore we have had no information to give to his relatives. Indeed, as the hon. Gentleman himself stated, it was because of the Hungarian Government's refusal to allow the British Consul or any British representative to visit Mr. Sanders in prison that in December, 1949, His late Majesty's Government suspended negotiations for a trade and financial agreement with the Hungarian Government. These negotiations have never been resumed and Hungarian imports into the United Kingdom have as a result been virtually excluded. They now consist of a mere trickle amounting to some £12,000 worth a year.
In the reverse direction, we are admittedly sending somewhat more to Hungary, British exports to Hungary amounting to some £700,000 worth a year. What hurts the Hungarians, however, is not the lack of British imports into Hungary but the virtual exclusion of Hungarian imports into the United Kingdom, because this means that the Hungarians are earning no sterling whatever in the United Kingdom market. There is good reason to believe that the ban on Hungarian imports into this country is hurting the Hungarians a good deal more than it is hurting us.
Last May the Government repeated the offer made by the late Government in May, 1950, to resume trade negotiations with Hungary if she would release Mr. Sanders. Discussion of this offer proceeded over a protracted period until December last when the Hungarians finally informed Her Majesty's Minister that they were not prepared to release Mr. Sanders in exchange for economic conces-

sions. The breakdown of these discussions was followed by the Hungarian offer on 20th January last to exchange Mr. Sanders for Lee Meng.
As the House will be aware, until Lee Meng's death sentence was commuted there could be no question of agreeing or otherwise to the exchange proposal. The death sentence was commuted on 9th March, and on 17th March the Prime Minister informed the House that Her Majesty's Government had decided to reject the Hungarian offer. I do not think that Her Majesty's Government can be accused of being slow in their consideration of this offer, as has been suggested not by the hon. Gentleman but in other quarters. Having regard to all the considerations that were involved, the constitutional position in Malaya and the possible effect of an exchange upon British subjects in other Communist countries, we had to consult a number of representatives abroad, and I do not think it is lacking in speed if eight days after the sentence of death on Lee Meng was commuted the Government reached and announced its decision in this matter.
I come finally to the hon. Gentleman's suggestion that a new approach should be made to the problem and, in particular, that an approach should be made to the Soviet Government. It may be—and we certainly hope—that the apparent improvement in the atmosphere of Soviet relations with the West will extend to other Communist States in Eastern Europe. I can assure the House that we are carefully watching for any signs of this and we shall lose no opportunity of profiting from an improved atmosphere in Hungary should it materialise. Nothing could lead to an improvement in relations between Hungary and this country more than the release of Mr. Sanders, for, as has been stated again and again in this House, this is the major outstanding issue between the two countries.
But when I am asked to approach the Soviet Union and seek a solution of the matter in Moscow, I must remind the House of the facts of the situation. These are that Hungary is not a constituent State of the Soviet Union with whom we have no diplomatic relations, but a sovereign independent State, and Mr. Sanders is her prisoner. It must be to the Hungarian Government, therefore, that we address ourselves on this matter, as


indeed we do on virtually every occasion when Her Majesty's Minister discusses any matter with a representative of the Hungarian Government.
I hope that the House will accept from what I have said tonight that Mr. Sanders is in no way a forgotten man and that the Government have examined every possibility and have taken, and will continue to take, every step open to them to bring pressure to bear to secure his release. We shall, of course, continue our search for a successful outcome to

this tragic case, and we shall certainly overlook no means, whatever it may be and whatever the quarter in which it may be sought. We shall certainly overlook no practicable means to this end.

The Question having been proposed at Ten o'Clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Half-past Ten o'Clock.